The Best, by far, is yet to comeLets examine CZO financials for observed and expected trends in its recent fiunancials.
1......SALES TRENDS
.....over the past 3 years, sales have increased from $6.5 million to $10.8 million in 2015
....in 2015, quarterly sales increased each quarter from $1.7 million ( Q1 ) to $2.5 million ( Q2 ) to $3.1 million ( Q3 ) and to $3.5 million in Q4.
ln Q1, sales increased for a fifth consecutive quarter, reflecting the new generations of product.
2....LOOKING AHEAD
......the big and most transformational change in 2016 will be the commissioning of the new plant.
This is scheduled to begin in late Q2 or early Q3.
The new plant will provide Ceapro with nearly 6 times the capacity of its current plant.
Further, and equally important, the new plant will be able to produce multiple products at the same time.
Currently, Ceapro must use batch processing which is inefficient, as only one product can be processed at a time.
That is, expect to see gross margins to continue to increase in the future.
Given the growth pattern over the past 5 quarters, its possible to forecast 2016 sales and net earnings.
Assuming a linear trend in quarterly sales, 2016 sales can be forecast at about $21 million or more than double 2015 sales.
Gross margins should be at least 70 % in 2016, which implies operating earnings of about $14 million.
Net margins should increase from the 41 % observed in 2015.
I will use 50 % ( Q4 net margins excluding special tax gains ) which implies net earnings above $ 10 million or about $0.15 per share.
Depending on how quickly the new plant can be commissioned, the above forecasts could be higher.
Fair value, considering the increasing growth profile, shoud be about $ 2.25, using 15 times net earnings.
Looking beyond 2016 to 2017 and beyond, with the new plant boosting sales, and gross margins, and several new products entering the sales stream, the upside could be well above $5