AMRK
I got some of the CC. Heard the prepared remarks, and the first couple of questions and I had all the info. I needed.
#1 Has anyone Look at Gross Margin Compression: Look at this. For some reason didn't pay attention to this trend until this quarter, because q4 was so strong on and EPS front, really didn't think about it as much as I should have.
Q1 FY 23 4.03%
Q2 FY 23 3.28%
Q3 FY 23 3.26%
Q4 FY 23 2.49%
Q1 FY 24 1.99%
This is not a great trend to say the least. 1) My take is so far demand is not picking up that much in the current quarter, now there excuse is that precious metals prices are high and buyers are uncertain where there prices are gonna go in the future. And because there have not been declines in gold prices (It has become more apparent to me they need gold prices to go down to get demand.) demand has somewhat dried up. From the sounds of it demand right now seems like more of the same this quarter as last.
Furthermore they complained about a lot of supply of silver with not much demand hence we have margin compression which is what is going on. So far based on what they said, it is continuing for the most part the same trend as this quarter. Maybe I will feel differently, but at least in the short-term, I feel margin compression is here to stay, and demand is gonna be lower. Which means we have terrible comps, possibly next quarter as well. There will definetely be a huge decline in earnings in my opinion this fy versus last, and when I hear thatI think single digit PE of no more than 5-6. Problem is if they are gonna earn like.77-.80 a quarter, what are we talking about a $15-18 price. Probably it gets bit better in the 2nd half, but that is only if margins are a stabilizing at some point, and if they stabilize at these lower levels it is gonna be hard to come close to quarters like we seen at q4. And right now demand is in serious question. Furthermore the decline of both new customers and active customers didn't exactly inspire alot of confidence. Maybe they turn it around, But this sound like an industry that currently has demand problems, and some cases in silver has too much supply, which means margins are gonna stayed compressed and right now demand is low. Now whether they are losing market share or the industry is going through a real tough time I have no idea. What it did sound like don't expect this massive rebound in q2 over q1, based on current trends of the quarter, which if that's the case I would argue $24-25 is too expensive for the stock. All is just my opinion, and I could always be wrong though.
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