PACIFIC INSIGHT ELECTRONICS CORP T.PIH

Q4 Out: Continued Revenue Growth, Balance Sheet Strong

[93Darkhorse93]

Strong revenue growth having for the fiscal year up 54% over FY 15. Positive to see that that the expense control was maintained in SG&A as they roll out new programs. The balance sheet looks so much better today then it did a year ago. Generating 16.1M in operating CF in 2016 and paying back over 10M in debt has freed up the optionality for the use of capital for deals and lowering the overall EV value in an EV/EBITDA calculation. I think the short term drop was based on the gross margin contraction due to the prototype programs which I didn't expect in all honestly to that degree. If the past year has been any indication of the success of their program rollouts this will just be a pause that refreshes before the new line of products get rolled out. Wish I had a bid in at the close there as I think the market reaction is overdone given its trades at 8x trailing P/E and 5x EBITDA. We could be in a similar phase where revenue and EPS exploded in the second half of FY15 when the initial LED programs were rolled out. Still has to be the best play in the autos and broader industrials.

[mjh9413]

Disappointing given my expectations but that reference to prototype costs in the qtr give some consolation as clearly working on new models for next production cycle, and also the leasehold expenses on the Mexico facility. Salary costs were a lower increase than I expected but the revenue number disappointed, as did the eps. Don't believe these fnancials will support an 8.5 p/e ratio

[bz1516]

Agree with your comments on the prototype costs.  Also note they expect more new business in fiscal 2017, though less than last year which was quite high. This stock has an unusually low multiple despite a very strong growth rate.  The attractiveness here is the low multiple given that growth, meaning a very high PEG ratio.  I believe being in the cyclical auto industry is almost