PLAY OF THE DAY
MT.TO
MT announced its Q4 and 05 results this morning. The stock closed at 13.60 yesterday and opened at the same level, indicating lack of confidence on its numbers. At the first glance, I thought the results were pretty good and the stock seems to be a buy at this level. However, I got a couple of questions, and I decided to wait for the conference call. Big mistake, the stock opened at $13.50 and went up to $15.5, that's a 15% gain on the first half of hour of the day!
I still believe this is a good company and the stock is still a buy at this level. Growth: revenue: 31%, EBITDA: 39%. EPS is not a good number to compare as it was diluted due to this year's IPO. Profitability: gross profit margin: 61%, EBITDA margin: 24%. ROE: 19.5%. Balance sheet: no debt, large cash ($2.0/share). It is in the right space as delivery of TV is in a generational type change to HD. IPTV is another growth driver. The HD equipment market is growing at about 10% annually and I believe that rate will accelerate in the next couple of years. MT is also taking market share from other providers. There are also some near term catalysts such as World Cups, and Olympics in 2008. The company is also looking for acquisitions, mostly to acquire technology and also accretive. Valuation is reasonable. It is traded at 18X of EPS05. While the company does not provide forward guidance, I believe it is not unreasonable to see 0.95-1.0 per share for 06, which will lead to 15X of earnings. This is rather reasonable in view of its 30% topline and EBITDA growth.
I like to open a small position, preferably below $15. While this is no longer a "buy low, sell high", it probably is a "buy high, sell higher".
MT announced its Q4 and 05 results this morning. The stock closed at 13.60 yesterday and opened at the same level, indicating lack of confidence on its numbers. At the first glance, I thought the results were pretty good and the stock seems to be a buy at this level. However, I got a couple of questions, and I decided to wait for the conference call. Big mistake, the stock opened at $13.50 and went up to $15.5, that's a 15% gain on the first half of hour of the day!
I still believe this is a good company and the stock is still a buy at this level. Growth: revenue: 31%, EBITDA: 39%. EPS is not a good number to compare as it was diluted due to this year's IPO. Profitability: gross profit margin: 61%, EBITDA margin: 24%. ROE: 19.5%. Balance sheet: no debt, large cash ($2.0/share). It is in the right space as delivery of TV is in a generational type change to HD. IPTV is another growth driver. The HD equipment market is growing at about 10% annually and I believe that rate will accelerate in the next couple of years. MT is also taking market share from other providers. There are also some near term catalysts such as World Cups, and Olympics in 2008. The company is also looking for acquisitions, mostly to acquire technology and also accretive. Valuation is reasonable. It is traded at 18X of EPS05. While the company does not provide forward guidance, I believe it is not unreasonable to see 0.95-1.0 per share for 06, which will lead to 15X of earnings. This is rather reasonable in view of its 30% topline and EBITDA growth.
I like to open a small position, preferably below $15. While this is no longer a "buy low, sell high", it probably is a "buy high, sell higher".
posted by ZIGZAG at 2/23/2006 10:42:00 AM
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