Companies of this kind and in this particular field encounter several problems when it comes to investors. Firstly, this is a business in which, according to most people, the giants exercise absolute control. This may be true, but even with the domination by companies such as Pratt & Whitney, or General Motors Company (NYSE: GM), professional entrepreneurs can earn a fairly good livelihood from spare components.
A small company like TAT can certainly maneuver its way to much larger sales than it has at present without disturbing the giants. The company posted a net profit of $2.7 million on sales of $34.8 million in the first half of 2006, which represents a 100% increase in sales and a 62% rise in net profit. TAT’s second quarter profit was around $1.4 million, up 65% on sales of $18.4 million, which were up 105%.
This sharp rise in sales and profit is the outcome of the acquisition by TAT of Piedmont Aviation Component Services. Since TAT is not covered by analysts, I am willing to bet that it will end the year with earnings per share of $0.90. Even without Piedmont, the company has managed to increase its sales and profit in recent years. Sales rose from $30 million in 2003, to $50 million in 2005 and $70 million this year. TAT also has an outstanding record in dividend distribution over a number of years.
I have been talking about this stock for a long time and I am pleased that the management is continuing to justify the hopes I have pinned on them. Incidentally, I read an announcement from New York which claims that institutional investors are starting to take an interest. The first of these is Bjurman, Barry & Associates, a fund which specialized in small stocks, and which has already announced the acquisition of TAT shares.
TATTF 1-yr Chart
Published originally by Globes [online], Israel business news - www.globes.co.il © Copyright of Globes Publisher Itonut (1983) Ltd. 2006. Republished on Seeking Alpha with full permission.