Moldflow Corp. (MFLO) gives plastic parts manufacturers an injection of software to keep things moving smoothly. The company provides design analysis and manufacturing applications used to design and produce injection-molded plastic parts. Moldflow's software offers manufacturers a way to test designs and optimize their production processes, including applications that allow customers to automate and monitor their production lines. The company also offers a variety of maintenance, support, and training services. Moldflow's customers have included Apple (NASDAQ:AAPL), BMW, GE Plastics (NYSE:GE), Mattel (NASDAQ:MAT) and Samsung.
Right off the bat, you need to know this is a $230 million market cap stock. That means it has only 11.45 million shares outstanding when multiplied by its price of 22, giving it about a $230 million market cap valuation. Stocks of this size usually have higher volatility. Keep that in mind.
Earnings are on the move at MFLO. In 2004, they were 29 cents a share, then jumped to 58 cents a share in 2005. 2006 they went down to 28 cents a share. But this year, look for 75 cents and next year 85 cents. That's because the company is selling its Manufacturing Solutions division, the one that brought in 26% of revenues but operated at a loss for fiscal 2007. Now that the money loser is leaving, revenues will decrease but profits will increase.
New products are being introduced, most notably Moldflow Plastic Advisors, a software program that contains features such as advanced 3D analysis for complex parts design. That will improve sales domestically and internationally. MFLO does well in Asia where 33% of revenues originate. It recently released a Chinese language version of its Moldflow Plastics Insight.
Some numbers: Current assets outnumber current liabilities by 3.5 to 1, with the company sitting on $65 million in cash. That could be used for acquisitions, heavier research and development or a stock buyback, something the company did in the most recent quarter for 249,000 shares.
Net profit margins should jump to 14.5% this year, up from 5% last year and improve to 15.4% next year. Return on Equity should be 8% this year, up from 3.9% last year. Fidelity Management, the big mutual fund, owns 15.1% of the stock; Paradigm Capital Management has 8.2%. Officers and directors have 11.6%.
As Benjamin was advised by Mr. Robinson: just one word, plastics. It seems Moldflow heard the advice and took it.
MFLO 1-yr chart