BrandPartners was out with its Q1 earnings release yesterday morning. The company continues to deliver compelling results, and I still believe it is just a matter of time until this stock breaks wide open. This one is easy to hold for the long term.
The company delivered $2.1 million in operating profits, and $1.8 million in net profits- this equates to $.05 per share in earnings, putting the company on a clip to earn $.20 per share in 2005.
On the top line, the company delivered a little less in revenue than Q1 ’04. This does not mean the company is not growing. As disclosed in the results, the company stated a big slug of revs didn’t quite make it into the quarter.
$.20 per share in earnings for ’05- you do the numbers for the valuation. I give up. A 20 multiple puts us at $4 per share. A 10 mulitple puts us at $2.
The company is not standing still. They invested about $300,000 to open an office and begin sales in London. They have also announced the formation of a new division to focus on the 22,000 sub prime lending institutions across the US.
Look for at least $75 million in sales in ’05- and $.20 per share plus in earnings. Just my guess based on anectodal information from management.
Here’s a long term look at the stock. This is a weekly chart going back to last August’s rebound. The stock never made it back to it’s 61.8% retracement level I would have loved to see as the perfect entry level for bargain basement shoppers.
However, it appears a new uptrend has begun, and a little volume would help tremendously. This is just a question of waiting out this confused and low volume environment in my view.
Your questions and comments are welcome.
Amazing the number of people that invest in the stock market and worry more about the price of the stock than how the company is doing. Do you know anything about BPTR warrants. One thing I have never been able to do is find a Web Site with information on Warrants. Since I feel like you that the stock price will be above $2.00 in 2006, maybe buying their warrants would not be so dumb?
Editor: I’m not a big believer in goofing around with the warrants on this one. If the stock goes to $2, you can make a 127% return on invested capital. The warrants have no intrinisic value until the stock is $2, and they expire in ’06 or ’07. Warrants are about leverage, but you have enough leverage with the stock at $.88 in my view. When the stock goes to $2, if you think it’s going higher, the warrants might be worth looking at.
I attended the Annual Meeting on May 20 and was impressed by Mr. Brooks the CEO. They have a great backlog. My only concern is the number of options outstanding. I am buying more stock.
Editor: The Rodney Dangerfield of stocks. No matter how well they do, they just can’t get no respect.
BPTR’s last swoon into the 70 cent range was a dip to 0.77 on 4/15/05. This morning we’ve gotten as low as 0.75. Last trade at 0.79. We’re coming very close to realizing a 38% Fibonacci retracement from the high. The conference call was upbeat and it was good to hear some analysts chiming in with questions. Maybe we’ll see a triple bottom in the 70s before moving out of this basing pattern. I’m disappointed with the price action but am adding to my shares at 79 cents.
Editor: It certainly is getting attractive at these levels. Management needs to be more effective at getting the story out there.
Getting the word out? Maybe BrandPartners should approach the producers of “The Apprentice” and enable the contestants to act as project manager on a bank branch redesign. Might fit into that Martha Stewart theme they’ll be using for the next season. As you talk with management on occasion, why don’t you pass along this idea if you like it?
Editor: Maybe they should just hire Trump to get their Brand out there- he is a master of getting paid while promoting his own brand. Great idea.
What do you think about the revolving door on the company auditors? What’s up with that?
Editor: Probably just shopping of a better deal. With Sarbanes/Oxley the accounting firms have basically become legal extortionists, and many small public companies are being more aggressive in shopping for the fees they pay.
Is there any significance to the after hour trading this past Friday & Saturday?
Editor: Not that I am aware of.
why is the stock taking a beating, is it the market?
Editor: I believe the same reasons I have been talking about for the last two months. Not enough volume to call it a beating.
With only one announcement this quarter, Has business slowed down?
Editor: No- on the contrary- the back log is robust. I don’t believe there is a slow down in the near future.
The back log maybe robust but what about the future??? It’s odd that last year was full of new business announcements but they appear to have vanished – could this be a classic pump and dump story? As there is just something not right with the valuation
Editor: The numbers are the numbers. The year end is audited, and in the last quarter they earned $.05 per share. If you are suggesting there has been fraud, I don’t know how to respond. If you are suggesting their business has simply vanished, I suppose you could be right. I have no information that business is slowing at the company.
The stock has dropped off the last few days, any reason for to do so? Is this part of a fickle market thats going on right now?
Editor: The stock is trading very poorly, but it’s on extremely light volume. Seems like a buyers strike. Getting very attractive- I am considering adding to my position.
Have you spoken to the mangement about new business? and why they think the stock price is falling? I dont believe being on the OTCC is the reason and the market is very strong at the moment.
Editor: Not lately, but might be on Monday. I just think the company is doing a horrendous job getting its story out.
Ok well if you speak to the mangement today, please can you post your comments as I would be interested to hear about future business and the affect this could be having on the stock price. thankyou
Editor: Expecting to have a conversation either later tomorrow or Wednesday.
The stock actually traded as high as $0.80 today. Appears that the $2.5 million in new business was the driver. The miniscule P/E ratio coupled with a market cap under $25 million has a lot of us very disappointed. If I were to sell my shares then the share price would probably zoom. Trying to be patient here while many stocks in the market are performing far much better than BPTR.
Editor: Or you could do us all a favor and sell. Despite the poor performance of the stock, the corporate performance makes this an easy stock to hold on to.
Have you spoken to the mangement? Are you posting your comments?
Editor: I will be soon. I spoke with Jim Brooks briefly week before last, and was gone this past week. I will get an update this week and publish something.
BPTR looks like a good buy at the current level. What’s holding this stock back? Any idea?
Editor: Nothing different than what I have published in the past. Will have some comments on June quarterly numbers later this week.
Looks like BPTR is holding ground. Am I the only one with a positive hunch about this stock? I picked it up at $0.91 and recently more at $0.75. I am planning to sit on it for a while, but am staying confident.
Editor: Owning this stock is a bet that someone is going to recognize the value here sooner or later, and the stock will end up in play. For the time being, the management is doing a completely ineffective job of getting the story out. Hopefully, they will right the ship soon.
Whats happened to your post. This quarter like the previous one looks as thought there is not as much new business and therefore the revenue could be lowere than last year.
Editor: On a quarter to quarter basis, I’m not sure where the company is. I do know the company has a very high level of confidence that ’05 numbers will be much better than ’04 numbers. So far, EPS is ahead of last year after the 1st quarter.