I thought SCX had a fantastic Q4. Especially considering how the stock has been slammed from the $8's to the $5's since the last earnings report. I was bracing for a Q4 loss on a sharp revenue decline. So the results we got yesterday a pleasant surprise, and I have no clue what the recent sellers are thinking.
As you noted, SCX reported Q4 earnings of .22/share. And I'm not sure how we've missed this but it looks like SCX always takes a hit in other income in Q4? About $1M or so the past 3 years in Q4. Not sure if it's pension stuff, the bonuses KiK mentioned or what. If SCX had reported a more normal level of other income along with those revenues, margins, operating income, etc...Q4 earnings would have been more like .35/share!
Q4 revenues over $61M was the highest since 2015. Annual earnings of .87/share also the highest in years. SCX earned .75/share in 2015 and .97/share in 2014. And the stock traded as high as $20+ back then!
There was a comment in the 10K about backorders being down from that unusually high amount last year. But SCX doesn't usually have any backorders, so the fact they still have $6.6M in backorders is a bullish sign imo. Especially after those big Q4 revenues and these improvements mentioned in the Q3 10Q (those orders were also down and Q4 turned out just fine):
"The North American precision measuring tool sales grew 10% in the quarter due to strong demand, however, backorders remain higher than historical levels. Implementation of a new production planning system and improved staffing levels have increased throughput and reduced backorders 25%, as shipments exceeded orders by $2.3 million, in the third quarter. In Brazil, our business delivered improved sales and earnings benefiting from the Company’s saw plant consolidation and a stable economic environment."
The SCX balance sheet still looks good with tangible book value around $10, including $2.22/share in cash. With that balance sheet and trailing earnings of .87/share (which was a huge increase vs. prior years), this stock is an absolute steal in the $5's. I snagged a few more yesterday and will be adding again today. If the company put out an earnings PR, stock would easily be up 30-40%. Maybe more. But unfortunately, their IR/PR efforts are lame. I feel like calling them and offering to pay for the earnings PR ha
SCX trades on the NYSE so you'd think the numbers will still get noticed at some point. If the stock doesn't do much short-term, I'll gladly continue to accumulate. They have an easy Q1 comp coming up. And that 10Q will be out in 2 months. Still think a chance SCX will be acquired at some point. Stock is incredibly undervalued and their products have a stellar reputation...seems like a larger company would love to acquire them, even if they paid double the current price.
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