Wednesday, November 14, 2007


DFNS earnings are OUT!

UGH!! I was looking for $4.3 million revenue and .017 in EPS. I said the earnings keeping the expenses down was key.

Well they beat the revenue #'s they came in at $4.6 million revenue but got HAMMERED on the EPS only giving .006 (that is 6/10's of a penny)

So for the year they have $14 million in revenue and about .042 in EPS for the year. They won't do the .07 EPS that I was hoping for that is for sure.

They do have .04+ for the year so far in EPS. So if the stock sells off tomorrow I wouldn't expect it to be HUGE. Yes it could get into the .40's but I wouldn't think .30's would be in the mix. By no means do I think its a $1 stock at this point. But I don't think its a .30 stock either.

I may sell out of some of my EXTRA shares tomorrow though I doubt I will sell my stockdoubling shares. I may be in this stock for a good while yet. Next earnings release won't be until the end of MARCH 2008! So we have over 4 months to wait for the 10K report. Hopefully in the meantime they will have some positive news releases in the mean time.

I will now give some Positives and negatives from the report....

Backlog is down to $5 million down $2 million from the last quarter.
Local military may only account for $1 million this current Q4
Margins got hit in a BIG WAY!
No new information on additional orders.
May take some time to get some real returns from the stock.

Book value of .24. So a .48 stock is just 2x book still very reasonable
Revenue continues to grow. $14 million so far should do at least $17 million for year.
With a $17 million year .58 stock would mean 1 to 1 price to sales ratio.
$17 million in revenue would also mean roughly 60% growth over 2006
.042 EPS for the year. Not what I had hoped but a nice base to stop the stock from falling too far.
Local Military seems strong.

If the orders dry up this stock could go much lower. If they come out with comments they could see some growth next year etc.. Then we still have some good life in the stock. It is still a good valuation on a Price to sales, Price to Book and P/E ratio. So I don't see a ton of downside unless of course the sales dry up. I don't see a ton of upside though either unless they come out with news releases about new orders etc..

We will see how the stock reacts tomorrow.

I would think the company would come out with a news release on the Q3 report sometime tomorrow before the bell.

Have a good trading day
Steve Hoven

No comments: