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J. Alexander's Corp (JAX) reports big earning loss and stock price goes up ... what gives?

|Includes: J. Alexander's Holdings, Inc. (JAX)

As of this writing, JAX's last price was 4.27, up 2%. Bid 4.30 and Ask 4.46.

Just looking at "J Alexander's Q4 net loss widens," one might wonder why the price opened up and not down. 

What's happening: the value game has switched perspectives. Prior questions have been, Is JAX going out of business? If so, what is its liquidation value?  Recently, we have been trading at near $3.5 -- close to my estimate of JAX in liquidation (see other posts).  With the current press release, nothwithstanding the write downs, Lonnie Stout has a made a case for JAX as a going concern ... which is a very different valuation standard.  Now we are looking at a return to book value (albeit a newer, lower book value)  based upon improving same store sales, room to raise prices, and cash in the till.

With the first quarter 80% over, Lonnie Stout's estimation of this quarter's same store sales and earnings being "substantially" higher is not that much of a stretch of the imagination.  It would be as much of a "prediction" as being able to bet on a horse that was already three-quarters the way around the track. And by the way, due to the extra time need to prepare the annual report, the first quarter report follows quickly on the heels of the 10k.  I expect another influential report in about 6 weeks.

JAX latest full year results
http://www.businesswire.com/news/home/20100317006860/en

Disclosure: long jax