Why AMCON Could Be Valued at $100+ Per Share 42 comments
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DIT is the best kept undervalued stock secret just needing to be discovered. The fundamentals of this company are amazing. I don't think anyone knows about it. By my calculations if you apply the P/E of DIT's competitors, this should be a $100+ stock.
1) DIT Basic Shares O/S Approximately 507k Float Approximately 307k
2) According to this site, DIT is the lowest float stock on all the major exchanges (It is extremely thin and not for large positions or chasing in my opinion!)
3) DIT's IBD ratings have vastly improved after this last quarter where they would qualify for the IBD 100 list. Composite is 98, EPS is 98, RS is 96. DIT's EPS is rated higher than GMCR , which is in the same IBD category and was on the IBD 100 after a nice run.
4) DIT generated Cash from Operating activities of $18m and paid off debt of over $15m for the first six months of this year
5) DIT pays a dividend
6) DIT just reported $2.60 EPS in what is traditionally its weakest quarter
7) ***DIT redeemed the Series C Preferred stock which will reduce fully diluted shares by 146,842 in this present quarter.
“This transaction will reduce our fully diluted share base by 146,842 shares. The full impact of this will occur in our fiscal third quarter,” noted Andrew Plummer, AMCON’s Chief Financial Officer.
8) ***For this recent second quarter (traditionally the weakest) DIT had Net Income of $2,096,358 on fully diluted shares of 805,236 for EPS of $2.60. Next quarter with the redemption of the Series C Preferred stock, fully diluted shares will be reduced by 146,842 to approximately 675,000 - 700,000. If DIT did just the same EPS in the third and fourth quarter as they just did in the second the calculation would be $2,096,358 divided by 700,000 = $3.00 per share EPS. This would put them on track for $10 EPS this year or a $12 EPS run rate. Assuming they have zero growth in their traditionally two strongest quarters over their traditionally weakest quarter.
9) ***DIT competitors CORE, NAFC, and SYY all have a P/E of at least 10
10)***$10.00 - $12.00 EPS X 10 P/E = $100-$120
AMCON is a leading wholesale distributor of consumer products, including beverages, candy, tobacco, groceries, food service, frozen and chilled foods, and health and beauty care products with distribution centers in Illinois, Missouri, Nebraska, North Dakota and South Dakota. Chamberlin’s Natural Foods, Inc. and Health Food Associates, Inc., both wholly-owned subsidiaries of The Healthy Edge, Inc., operate health and natural product retail stores in central Florida (6), Kansas, Missouri, Nebraska and Oklahoma (4). The retail stores operate under the names Chamberlin’s Market & Cafe and Akins Natural Foods Market.
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On Apr 25 08:55 AM Paul Sco wrote:
> They had a one time 1.7m expense last quarter
> Fully diluted outstanding shares have decreased by 146k
> Lee inventory was bought by their customers last quarter
> EPS will be $10-$12
> CORE analyst put a target that gives a P/E of 15
> $10-$12 EPS X 10 P/e = ???????????
> Watch the hedge funds buy this up
Quotes from the author:
"incurred a one time 1.7m liability = expense this Quarter"
"Q2 had a 1.7m non- recurring tax expense"
"They had a one time 1.7m expense last quarter"
His posts seem to imply that this expense was paid last quarter. This was in fact an "accrued expense" and was posted as a liability on the balance sheet. This has not been paid yet and is due by the end of July this year.
Hope no one got this person to do their taxes for them. Shocking revelation.
Your refusal to examine many of the facts I presented combined with the fact that you just joined seeking alpha makes me believe you are just someone that has an axe to grind with me personally. Why don't you short DIT and let's see how it plays out.
* DIT's IBD #'s have been updated and it now has the coveted, stellar IBD EPS 99 rating. RS is 97, and Accum/Dist A . All are Best in Group which includes GMCR. DIT is now above GMCR in its IBD group and GMCR has been on absolute momentum run all year from the $30's to the $50's. With an uptick in volume, I believe DIT is a candidate for a similar momentum run and in turn, the top of the IBD 100 List.
* DIT generated 18m cash flow from ops in 1h 09 and paid off 15m debt (another 5m debt comes off this quarter for sale of disc ops) and 2m preferred stock redeemed which REDUCED diluted shares o/s by 146k to 704k.
* If you take DIT's 2008 net income by new diluted share count it is $8 EPS.
* If you take 1H 2009 net income (traditionally weakest quarters) by new diluted share count it is $4.98
* DIT I get an $10-$12 EPS run rate for 2009
* Competitor CORE has 15 p/e on recent analyst target ($30 target - $2 EPS Estimate)
* DIT has a 330k float lowest I can find on on any major exchange 550k o/s
* Conservative management
Thin stock and volatile. Can be dangerous and not for large positions in my opinion. However, if hedge funds and value investors discover it, with this share structure we could be in for a GMCR type ride or more. It could double and I could argue it is still undervalued compared to CORE based on the numbers.
What Does Accrual Accounting Mean?
An accounting method that measures the performance and position of a company by recognizing economic events regardless of when cash transactions occur. The general idea is that economic events are recognized by matching revenues to expenses (the matching principle) at the time in which the transaction occurs rather than when payment is made (or received). This method allows the current cash inflows/outflows to be combined with future expected cash inflows/outflows to give a more accurate picture of a company's current financial condition.
Accrual accounting is considered to be the standard accounting practice for most companies, with the exception of very small operations. This method provides a more accurate picture of the company's current condition, but its relative complexity makes it more expensive to implement. This is the opposite of cash accounting, which recognizes transactions only when there is an exchange of cash.
On Apr 26 04:49 PM garethd wrote:
> I just noticed that the author has "an accounting/finance background".
> Now i'm completely shocked. How could someone with this training
> be so flippant when it comes to dealing with numbers. There is nothing
> precise in any of his posts. Disturbing.
>
> Quotes from the author:
> "incurred a one time 1.7m liability = expense this Quarter"
> "Q2 had a 1.7m non- recurring tax expense"
> "They had a one time 1.7m expense last quarter"
>
> His posts seem to imply that this expense was paid last quarter.
> This was in fact an "accrued expense" and was posted as a liability
> on the balance sheet. This has not been paid yet and is due by the
> end of July this year.
>
> Hope no one got this person to do their taxes for them. Shocking
> revelation.
>
>
>
>
>
Your posts are a mixture of fact and fiction. The factual information is certainly positive but i feel that the most important fact (Federal tax increase of 200% implemented this month) far outweighs the positives. This seems to be one issue that you have failed to address in any of your replies to me. There are numerous articles detailing the negative affect this will have on the tobacco industry. Have you read any of them?
"* If you take 1H 2009 net income (traditionally weakest quarters) by new diluted share count it is $4.98"
Is this how you are attempting to justify your EPS $10 - $12 numbers It just so happens that Q2 had a 2.6m benefit that will not be seen next quarter. It was an anomaly whether you like or not.
This is getting downright insulting to the posters here who have done their research. Your posts are fallacious and should be deleted from this site.
On Apr 26 04:54 PM Paul Sco wrote:
> garethd what is shocking is that you do not understand accounting.
> If you book a liability you also book the corresponding expense at
> the same time (regardless of when you pay it - it's called accrual
> accounting and yes I am a CPA). So yes and expense was booked if
> they had a liability that they knew of. Basic accounting. You aer
> the one that seems to not understand accounting.
>
> Your refusal to examine many of the facts I presented combined with
> the fact that you just joined seeking alpha makes me believe you
> are just someone that has an axe to grind with me personally. Why
> don't you short DIT and let's see how it plays out.
You were wrong on your accounting statements. You obviously are not here to debate facts but have just joined SA because you have an axe to grind with me.
1) They had a one time 1.7m expense last quarter in addition to the pricing increase
2) Less inventory was bought by their customers last quarter and normal levels will resume this quarter per the 10-q. More inventory sales = more revenue
3) Fully diluted outstanding shares have decreased by 146k
4) Examine 2008 net income if fully diluted shares are 704k
5) Now do the same for first half 2009 net income
6) They could not grow and do $10 EPS this year
imo EPS will be $10-$12
CORE analyst put a target that gives a P/E of 15
$10-$12 EPS X 10 P/e =?
Insiders selling out on Friday. Not good.
www.sec.gov/Archives/e...
He is here to bash you.
As for DIT - you make an interesting case for at least $10 eps
question is can this stock get any decent volume ever?
The stock is undervalued by p/e no matter how you slice it
However I will wait to see if it gets volume and I wont chase it
www.courant.com/news/p...
The tax increase is only the first move in a recharged anti-smoking campaign. Congress also is considering legislation to empower the Food and Drug Administration to regulate tobacco.
www.instantbreakingnew.../
Yikes. My target is $10 based on this.
www.starbulletin.com/e...
NEVER short a 350k float stock!!!!!
LOL
Just making an argument that is should be valued at that
I have made almost 8 points since the article comes out
expertresearcher probably underwater on short by about 6-8 points
stops in place to protect my profits
expertresearcher with a 350k float unlimited losses ahead?