Hello from smoldering Europe.Although many have good points here from reading all your posts, and the Financials, and listening to the ER with bad internet.
I have a different take as to the SP drop.
I will not be answering back to any of you till October when I back, so it's just my HO.
The share price is acting as it should. Many Traders have sold today on good news. Therefore the SP drop. Those smart enough to take advantage of $67 as a base price took advantage of today's news, and are trading the heck out of the stock. Therefore the SP will drop.
This Beggs the question?
Is there anything wrong with the company's fundamentals?
NO.
In fact, the opposite.
The company is in a transition in the Downsview Manufacturing facility. They need to invest in Inventory to protect their customer's order backlog. There is always a learning curve with a new facility too. So they are protecting themselves from hiccups at Pearson. They are doing the right thing with Inventory build-up. They are using their own money from Reserves to build-up Inventory to support such move.
They have to get through this Major Move. They will use the FCF at the end of the year from 2023 profits to pay down LTD. They will make a ton of profits this year. They may also use some more of the Reserves and pay off more Debt. They neededed to get the manufacturing side sorted out before that. They dropped more of their Reserves into the Debt. This is well thought out. Since they needed to stablelize this once SCATTERED COMPANY. Bart and Eric are smart businessmen. They are going to get this house in order.
First Pearson. The Service Centers are done. And then the Focus on the LTD. They will end up getting a huge LOC soon. They have a great credit rating as well, and getting much better as time is getting on. So better LOC interest rate. Therefore the Reserves maybe available to pay the Debt. Borrowing at 3%, is cheaper than taking on LTD at 7.5%.
The Reserves are useless now once this company is set up after Pearson. Plus the huge annual FC Flows coming added to the extra Reserves annually, and the Debt will go down in the next phase of the 5 year Plan. This is truly 5 year Plan, not what Bellamare did in 2015. A strong Pure Play manufacturer & a great CFC machine set up.
So if you're a long. This is great news. We have the number one BJ manufacturer and the best Executives running it, and the Plan is on track. So relax. Spend money to trade if you feel like gambling & buy to hold if you can afford it. 2025 isn't far. That's the only advice I give to my kids who own shares in this outfit.
Enjoy your summer.
Cheers from
859/145