Balance Sheet on this thing is incredible. Here's a summary of some quick DD I did:
Cash/Cash Equivalents have increased in each of the past 4 quarters.
Inventory has decreased in each of the past 5 quarters, so the product is still selling even amidst tough economic times. In fact, this is one of the main things I look for for companies right now. If they can not only survive now, but either continue selling their product at a normal pace or even a quicker pace, then they will flourish as the economy recovers (if and when it does), assuming the market still finds its product valuable. The explanation point on good inventory reduction is that consumer confidence is strengthening.
Total Long-Term Debt is only 420k and Total Debt is only 496k. These debt figures have been paid down in each of the past 5 quarters (and remember that the company is still increasing its cash position). Notable is that last quarter the company reduced its Total Debt from 3.5M to the above-stated figure. With nearly 17M in cash on hand and virtually no dilution over the past 5 quarters, the company's capital structure is very strong.
*** These figures have all been taken as of the company's last reporting quarter (12/31/09). Recent filings and/or PRs should be looked to to ensure that these figures are still accurate.
The industry average P/E is 27.9 w/ some semiconductor companies having P/Es as high as 53. We'll be conservative and use 20. The company issued guidance of .04-.07 for Q1'10, historically their slowest quarter, and attributed the positive demand environment for substrates as the reason they expect to offset normal seasonality. The current consensus estimate is .035. The company has already given us guidance higher than that figure, so it should be an easy beat. Let's be conservative again and use .04 and then let's assume they (again, being conservative IMO) earn .05 in Q2, .06 in Q3, and .07 in Q4. That's .22 for the year. Using our P/E of 20, that puts us at $4.40, an easy 33% increase from today's levels, and with conservative figures to boot. If the company can crank out .07 in earnings this quarter (remember, their slowest) and then let's just say they earn that amount in each of the three remaining quarters, that would put us at $5.60 - again using somewhat conservative estimates. Let's say our dream comes true and the company reports EPS for the year of .30 and we are awarded the industry average P/E of 27.9 - that would come out to $8.37.
As you can see, whether you value the company liberally or even with extreme conservatism, AXTI is an easy winner.
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