Q.E.P. Company: Flooring the Future

| About: Q.E.P. Co., (QEPC)

 According to the company web site, Q.E.P. Company Incorporated (OTCPK:QEPC) markets approximately 3,000 products used primarily for surface preparation and installation of ceramic tile, carpet and vinyl. Walk through any Home Depot (NYSE:HD) or Lowe's (NYSE:LOW) and you will likely see something with the QEP logo. If not QEP, then perhaps one of the brands owned by them...Roberts, Brutus, Vitrex to name a few.

Like most stocks during the last year, the share price has been pummeled to ridiculous levels. At Wednesday's closing price of $3.80, the market cap is just $12.85 million. Not bad for a company with $217 million in sales the last fiscal year. In the last four quarters the company has earned $0.95 per share, despite the "housing meltdown". In the quarter ending August, 2008, they recorded record sales of $61 million.

The $0.95 earnings per share has occurred despite increased costs related to the rise in oil, the housing crisis, the credit crisis, and record drops in consumer confidence.

There's more, the company recently authorized a $2 million buy-back plan. Considering insiders own nearly half, with a market cap of only $12.85 million, that can take out a sizable portion of the float.

Just a few other items of interest: Book value is nearly $8/share; Price to Sales is only 0.06; P/E is about 4; the CEO regularly buys shares and has openly discussed the potential to explore "strategic alternatives" (he's currently 65); they have a foothold in China; and even in the recent credit crunch, they have credit agreements in place.

I suppose the company could suffer if we stop having floors, but as long as we are bound by the laws of gravity, I see a good future for QEP. From the current price level, a nice gain can be had if the share price only moderates to normal levels.

Disclosure: Author holds a long position in QEPC