Catalysts that make ERS a buy:
1) Empire's sales volume have been, and will continue to be, a function of its ongoing ability to secure quality aluminum products from its suppliers. The Company has also used its excellent customer relationships to leverage sales by developing long term relationships with its customers and understanding their needs. Because the Company has always engaged in a strategy of developing long term relationships, it has been able to build sales volume without a similar increase in selling, general and administrative expenses that would otherwise accompany customer turnover.
2) During the first nine months of 2005, net sales increased $100,638 to $260,237, or a 63% increase, from $159,599 in the first nine months of 2004. This increase was due to approximately a 34% volume increase in shipments to the Company's customers and an increase of approximately 21% in average pricing. Gross profit increased $8,773 to $20,745 in this period, or a 73% increase, from $11,972 in the first nine months of 2004. The dollar increase in gross profit is due primarily to the increased sales volume and to a lesser extent to the increase in the gross profit margin. During the nine months, gross profit as a percentage of sales increased due to strong demand for value added products sold.
3) The Company's ability to grow sales without as large a percentage increase in selling, general and administrative costs led to an increase in net income of 97% from $3,614 in September 2004 to $7,134 in September 2005. The Company's ability to increase its supply of product has been and will continue to be the main factor for increased revenues. The Company's top ten customers represented 43% of sales in the nine months of 2005 as compared to 44% during the nine months of 2004.
4) Technical Analysis: ERS has been making new highs and pushing higher above its upper end bollinger band on very good volume, showing increasing investor confidence. (For TA, logon to my website)
With a solid customer base & strong demand for value added products, I believe ERS has significant room to increase its growth in sales and its stock price.
ERS 1-yr Chart
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