AMA vs. SNA
The following is a well written comparative report by
Mr. TeePee posted about a month ago. As the share price (and mkt. cap.) widen between AMA and SNA , its good to keep things in perspective. Also, for those of us who are about as slow as AMA or missed his original posting, here it is. All credit due
Mr. TeePee.
TP Times newswire – Connected to the Web - February 11, 2011
Much has been made about the competition between SNA and AMA and the respective value realized in the market. When the facts are compiled it speaks to an investment opportunity for SNA shareholders to sell/trade their shares at a premium and buy/switch into a better opportunity with greater value and prospects, that being AMA. While SNA and AMA compete in the stock market, SNA is not a worthy competitor in industry vis-à-vis AMA. SNA’s absence of contracts, STC’s, testing and revenue, position AMA as a value trade with much greater upside. Industry backing of AMA greatly outweighs SNA, with L-3, SNC, HBC and least of all the OPTIMI association with AMA. Considering the barriers to entry, AMA are years ahead of SNA and have a proven product being sold globally today, generating revenue today and setting the industry standard for tomorrow. Though SNA at present is valued with a greater market cap, this can be largely attributed to financing activities and dog an’pony shows promoting the stock, not their achievements. Bait and switch tactics by stock promoters are good for the short-term trader but are not valid investment criteria for the prudent investor and only speak to vested interest to sell an inventory of stock. Plainly, they would agree that AMA is the industry leader, they do not ask you to buy SNA based on better results or achievements. If the same investment metrics applied to SNA were applied to AMA, you would easily have a stock price in excess of $1 conservatively. SNA shareholders, this is your chance to relieve yourself of your burden and find value by investing, yes investing with the LEADER, in the industry, AEROMECHANICAL – AMA.
Considering SNA’s market cap (and lack of achievements), if applied to AMA (industry leader), it would imply a share price for AMA of
.37, a 57% increase from today’s close. As an investor if you see SNA valued at such levels being justified, then the potential return from making a switch to AMA is a no-brainer.
If you compare price to sales ratios SNA shareholders are paying p/s of 284.014 x’s, compared to AMA’s p/s of 5.459 x’s. Therefore using SNA’s P/S ratio applied to AMA, would imply a share value for AMA (industry leader) of $12.22. From today’s price for AMA that is a 5100% return. Applying AMA’s p/s ratio to SNA (the reverse), would put the SNA share price at
.005. Either SNA is greatly overvalued or AMA is drastically undervalued.
When revenue is considered, AMA generates 33x more revenue than SNA, with AMA reporting greater unearned revenue (business backlog) than revenue. Clients? AMA has over 30 different clients, in excess of 225 planes using the equipment today, supposedly 70+ waiting to be installed and a country under contract to support revenue generation. Compare that to SNA’s Shaheen deal which is still waiting for a STC and is for one (1) plane (more when the STC comes, when it comes, if). Recent CMC deal granted, however will not generate any revenue in the short term and states, “to cooperate in the establishment of an integrated turn-key solution”, so the product isn’t quite ready for the market, hence, no revenue. AMA recently announced adding three more C-130 aircraft to a mid-east contract already in place. SNA is testing on one (1) C-130 in the mid-east. AMA are getting paid, revenue. With AMA’s present client base signed on for many years, over the next 20 years if nothing changed they would have banked $100 million in future revenues.
OPTIMI. AMA was asked to participate in the Sesar sponsored OPTIMI program, a direct participant and contributor. SNA was granted a 5 month test program with Astrium. OPTIMI just in the last couple of weeks submitted it’s FINAL report to Sesar. SNA still has 3 months of testing. Meaning, SNA’s input has nothing to do with the recommendations being considered by OPTIMI and thus opportunity for revenue, very little. However, AMA has already, in the preliminary report, been named as a medium term solution for 2011. Making for a greater probability that they will be able to generate revenue. Other than AMA’s technology, there are no other competitors capable of providing the technology AMA has today, today.
SNA partnered with CMC, 9,000 people world wide. AMA partnered with L-3 Communications, 62,000 people world wide, 15 billion sales, control 70-80% of the FDR market. AMA has been working with L-3 for over a year with the OEM’s and recently announced Hawker Beatch Craft as the first OEM to use their products. At best, SNA could expect a year or two out some interest from OEM’s, that being they get the STC’s by then. (AMA has worked over 10 yrs to get over 200 stc’s)
SNA is working with Astrium. AMA is working with Iridium. Iridium is world wide, pole to pole coverge. Astrium, no. AMA has partnered with Guestlogix(GXI). A leader in airline retailing services etc. SNA ? GXI gives airlines the opportunity to generate revenue, which means a sooner payback to them and future revenues. AMA looks good.
China. Who doesn’t want to be in China. Apparently SNA. AMA has dedicated staff to just that cause; have signed contracts, shipped product and are shipping again; after meeting with the Chinese with their partner L-3, the Chinese are even more comfortable with their relationship with AMA. They are backed by partners who show the ability to be in business 30 years from now.
AMA has planned the work and worked the plan, whereas, SNA has sought to generate revenue via the courts. AMA is adding directors to the board with direct experience. SNA are losing people for “personal” reasons, standard line when the ship is sinking. SNA has used Agoracom as their IR firm, like other small players do. While AMA just signed on one of the most respected IR firms on the street in Toronto, Barnes McInerney Inc, who handle RIM and SU as well as many other billion dollar firms. Companies capable of generating revenue on their own and not from their shareholders.
As far as competitors in the real world, AMA is fighting against a competitor that does not exist and AMA is by all standards the leader in their field. On the markets, they will be compared unfortunately to SNA, which I have shown is not even a comparison of equals let alone a valid competitor capable of stealing market share. Short SNA, go long AMA.
No better time than the present to make the switch from SNA to AMA. Straight across trade with all the upside.
TeePee