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- Greystone Logistics has sold off by 23% in the wake of disappointing 4th quarter earnings.
- Gross margin dropped by 5.7 percentage points in the 4th quarter due in part to an anomalous comp, but was up by 1 percentage point for the full year.
- GLGI now trades at approximately 4X TTM earnings.
- Two big potential catalysts remain as possibilities over the next year or two.
- Non-MillerCoors pallet sales grew by 36% in full-year 2014 and should soon become a majority of the business.
Greystone Logistics: An Undervalued Stock With Considerable Optionality
- Greystone Logistics, a microcap manufacturer of plastic shipping pallets, is one of the most appealing investments I have seen.
- With an enterprise value to EBITDA at 6.28, investors are currently writing off the company as a risky, debt-ridden enterprise that relies too heavily on one key customer.
- We believe that GLGI's business, backed by its quality products and sustainable value propositions, will continue to grow, and, at current prices, offers asymmetric upside and optionality.
- With the most conservative assumptions and completely discounting a potential deal with Anheuser Busch, we project that GLGI will achieve a 2015 free cash flow yield to EV of 7.8%.
- Applying a 45% haircut to historical non-Miller Coors sales growth, we conservatively value shares at $0.73, 38% higher than the last sale price of $0.53.
Greystone Logistics Appears Poised For A Major Merger
- Greystone Logistics' CEO has privately acquired a plastic pallet maker with 3X GLGI's revenues.
- Various news items and documents show that Kruger's holding company bought plastics giant Trienda out of bankruptcy in a sale closed on April 10.
- A merger of Greystone and Trienda seems imminent and bodes very well for the former's shareholders.
- A look at potential conflict of interest.
Key Points Regarding Greystone Logistics' Q3 2014 Earnings
- Greystone now has an all-time record $2.9M of inventory on its balance sheet, potentially gearing up for a large sale.
- Pallet sales to non-MillerCoors customers rose by 43% in the quarter, continuing a promising trend.
- One-time charges turned an otherwise flat quarter into a one penny loss for shareholders.
The Price Is Wrong: Greystone Logistics At 5X Earnings
- Greystone Logistics has established an early competitive advantage in the plastic pallet industry.
- I expect periodic, large jumps in revenue and profit over the next several years.
- The company is, quite simply, priced wrong at 5X earnings.
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GLGI vs. ETF Alternatives
Greystone Logistics is a high growth manufacturing and leasing company that designs, manufactures, sells and leases high quality plastic pallets that provide logistical solutions needed by a wide range of industries such as the food and beverage, automotive, chemical, and pharmaceutical and... More
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