Miles J. Stoner, @StockHollywood

Dallas, Texas

6.18.2012

BODY - Value Trade

BODY traded at $30 on May 3rd and overnight they revised their Full Year outlook for both revenue and eps.
  1. Revenue = $333 million v. $346 million, which is a $13 million dollar miss.
  2. EPS = $1.34 v. $1.52, which is a 18cent miss. 
Because of this the stock tanked to over/under $15/per share, which is a 50% loss, for the next  Month and half into today, which is June 18th, when they updated their Full Year outlook once again to:
  1. Revenue = $325 million v. $335 million, which is a $10 million dollar miss.
  2. EPS = $1.07 v. $1.35, which is a 28 cent miss.
 The stock his a low of $8.21 per share today, which is an additional 50% loss.

Looking at the big picture, which we need to find value in this stock and determine if its over sold or not, the stock is down from $30 to $8.5, which is roughly 70% hair cut all because of a
  • Revenue = $23 million dollar loss v. $325 million in revenue (which is what they make) representing only 8-10% of a revenue loss.
  • EPS = 46cent loss v. 1.07, which is where they say they are to come in at and represents 50% cut in eps from the prior, which gives the stock a value of $14-16.
So, conservatively, a 20% bounce is what I'd look to play off of the lows. 8.21 x. .20 = $9.85 (value)
Thats super conservative though. Should be good for a long swing trade over the next few days.