General BEV Stuff!First, I would like to thank all those who take the time & make the effort to offer their thoughts on this thread. FWIW BEV is my second largest holding out of the 15 stocks I currently hold. IMO the slide in share price over the past few months was way over done. It was the classic example of a nervous, pessimistic market & short term market mentality over a couple short term disruptions in revenue flow.
I was very pleased with the news of the past few days, particularly the new contract, which seems to have the potential to play a signifcant, positive role in the coming years for this company. It will help to fill any holes in the revenue stream for the short term & could become a major portion of the total revenue generation over the next few years.
As for the acquisition, so far, we have a limited amount of information on it. RC offered this comment on Oct 18 before the ER;
The acquisition of a company that is permitted to incinerate PCB
contaminated construction and demolition waste. MRR’s operation in
Cornwall, Ontario, has a $4 million revenue run-rate, of which about onequarter comes from BEV. BEV purchased the business, which was under
creditor protection, for a token amount, and will use its own sales force to augment MRR’s revenue.
So they paid a token amount but it sounds like the company has debt and is unlikely to be cash flow positive. It seems to me that this will not likely be accretive to net earnings or positive cash flow in the near term. This acq may have been done to help obtain the new contract or BEV management might see some potential in the business moving forward which complements their existing business.
As for the new earnings projections offered by BEV on Friday, it is a downward revision based on public NR's but if you review the analyst activity, you will see that RC lowered FY estimates in late Sept by 7 cents to 76 cents & in general the consensus estimates have been revised down over the past 2 months by other analyst as well. It seems like possibly BEV informed or guided the analyst lower but not the public market. This may be another example of the unfair disclosure that frequents the Canadian investment landscape. If BEV management is reading this then they should take note that many of their shareholders are small retail types & we deserve to be kept informed equally in order to make informed decisions & maintain satisfactory trust levels.
As for Book value & P/B, this is relative to the net margins. The net margin on earnings for the first 9 months of the CY are 24%, this is extremely high for a public company. This results in great net earnings and therefore a higher valuation to reflect those earnings. A value investor might look at the current P/B of 4.95 (15.5M shares basic & BV of $29.634M) and think it to be high but a growth investor would look at the P/E of 14.8 (based TTM net earnings basic) and CY growth rate of 267%, trailing 9 month PEG of .055, forward PEG estimate of .296 based on NY over CY analyst consensus estimates ($1.17/$.78/14.8) & think the stock was extremely cheap. This is defintely a high growth, small cap stock, so it all depends on your perspective of what matters most.
I think the stock is a great buy at the current price. If some things, such as KL, fall into place, then this stock could have some tremendous upside over the next 6-12 months. Cheers!!!