Saturday, July 12, 2014

IEHC Reports Higher 2014 Earnings

Price$ 5.00
Market Cap$ 11.51 M
P/E TTM7.9 x
Div yield0.0 %
ROE14.4 %
IEH Corp (IEHC) recently reported 2014 results. Revenue was $15.4 M versus $13.3 M the previous year. Income was $1.5 M versus $0.9 M the previous year. Gross margin was 35.9% which improved from 31.9% in the previous year. The stock trades about 70% higher than when I bought it 17 months ago because of these numbers.

The only negative is that all the yoy earnings increase came in the first half of the fiscal year. The revenue was better in the second half versus a year ago. However, the earnings didn't improve yoy because of higher SG&A expenses. But then again I wouldn't read too much into the quarter by quarter fluctuations. This is a very small company after all and an extra business trip would have an impact on the bottom line.

I am holding this baby long-term because it has potential for significant gains in the coming years.

Tuesday, July 8, 2014

Installux Expanding Despite Economy

The Installux CEO Chistian Canty recently gave an update on the company. In it, he expressed pessimism towards the current French economic situation — just like last year. However, he believed that the company could maintain its revenue and margins in the company's core aluminum business in the current year. He also said management could try to grow the company using its excess cash and equivalents to acquire businesses. However management feels that is risky because of the current economic malaise. Instead, they decided to focus on organic growth in the coming two years.

The company owns six divisions. One is FAC, which does aluminum coloring and surface treatment.  The company will double the floor capacity of this division in 2015. The management feels they can fund the expansion with increased business and, if necessary, by bringing back work doled out to subcontractors.

A second division is IES, which makes metal of a specific cross-sectional shape. This is a process called extrusion. Management has decided to buy a second press to do this job as the division has been running at full capacity for two years now. The location for the expansion is still unknown, but it will happen in 2015 also. IES is the largest of the company's six divisions.

In other company news, preliminary first quarter numbers indicate an 8% increase in revenue. However, Canty said the number can fluctuate unpredictably from month to month.

I bought this stock 16 months ago and it has risen 45%. I am holding on to it because I believe the company is undervalued without the expansion plans. With it, I have even more to reason to wait to see how things go in the coming year or two.