tbone, the other thing to consider with LMIA is that the company operates in a very cyclical industry, and their own guidance beyond the current FY is very conservative:
"Based upon existing contracts with our customers and anticipated production rates, we expect sales of current products to increase by an additional 5 to 10 percent in 2006."
-from Q1 05 pr
Perhaps the company can earn 0.50 - 0.55, if you assume that the Q1 was hurt by one-time expenses. That also assumes some healthy increases in margins if the company can hit the top end of its guidance.
The key question is what do you think the market will value that FY05 numbers based upon a dramatically slower growth rate in FY06? Of course, that could change at any moment, but I think investors are guessing that a 10x PE is probably appropriate right now.....
Its not a stretch to say that the FV here is in the low 5s. Of course, you could play the earnings pump game and hope that if the results are good (they have an easy y/y comp of 0.02 coming up) that daytraders will bid up the stock to high levels....but it does have a bit of overhead resistance.
I do think its undervalued here, but not dramatically so.
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