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Thursday, 22 April 2004
"A reader writes" What about WNC?

Hello Friends! It sure was a breath of fresh air having a great rally in the market today. Hopefully, this will not be a short-term rally but more the start of something bigger...As always, please remember to always do your own investigation of all stocks discussed on this blog, and be sure to discuss your decisions with your investment advisor as I am just a fellow AMATEUR investor, and do not know what your personal situation is and whether stocks discussed will be timely or appropriate for you.

I always like to receive email, even when I was a kid, I found it exciting to check the mailbox and find out what had arrived! Around these parts, if you have any questions or comments, please feel free to email me at bobsadviceforstocks@lycos.com

Today, I got a nice note from Jason M. who wrote:

hey bob

thnx again for all the great info and adivce.

i was wondering what you think of WNC. they are a
local company in the city i live in. the recently
have recieved a grant from our town to educate thier
employees. they claim that they are selling mroe
trailers than they ever have and they announced the
other night that they have a plan in place to be out
of debt in the next 18 months. these all seem like
good signs to me, but then again i am the newb.

what sort of things do you look for in the stock that
you like?


First of all, let me repeat that I am not qualified to determine whether WNC is a good investment for YOU or not. That you will need to figure out. All I can do is let you know how it fits into the parameters I use to assess an investment...and I would be happy to do just that.

First of all WNC is Wabash National Corporation. They closed today at $28.50 up $.20 on the day or 0.71%. According to the Yahoo "Profile", Wabash "...designs, manufactures and markets standard and customized truck trailers and intermodal equipment under the Wabash, FreightPro, Articlite and RoadRailer trademarks."

You asked me about "what sort of things" do I look at in analyzing stocks. Well, the FIRST thing I like to do is find out how the company is doing right now. The best place in my mind is the latest quarterly report. Now if you can believe it, (I was surprised myself), WNC just released earnings a few moments ago! For the three months ended March 31, 2004, net sales for the first quarter were $222 million compared to $223 million for the same period last year. So this was OFF a bit. The good news is that Net Income was up strongly at $6.9 million compared to $1.4 million last year or diluted net income was $.23/share vs $.05/share the prior year. So the revenue was FLAT but the earnings were up nicely.

How about longer-term? The place I like to go for this is the free part of Morningstar.com. On this site, I like to check what is called "5-Yr Restated" financials. For WNC this is posted here. One of the things I see right away, is that revenue was $1.3 billion in 1998, peaked at $1.5 billion in 1999, and has dropped to $.9 billion in the trailing twelve months. The latest quarterly report has done NOTHING to convince me that this 'shrinkage' of revenue has turned around.

Earnings-wise, the company lost money in both 2001 and 2002, and is shown to have lost money in 2003. At least in the latest report, they are 'turning around'. Free cash flow which was $(76) million in 2000, improved to $0 in 2001, $99 million in 2002 and $34 million in the trailing twelve months. The balance sheet shows adequate if not excessive assets with $2.6 million in cash and $214 million in other current assets. There is a good amount of debt with $144.9 million in current liabilities and $283.2 million in long-term debt.

How about Valuation? For this I like to go to "Key Statistics" on Yahoo. Here we find that the market cap is at $767.08 million and that the forward p/e (fye 31-Dec-05) is only 12.45. Even with this low p/e the PEG is still high at 3.17. The price/sales is nice though at 0.86.

There are 26.92 million shares outstanding with 26.70 million of them that float. A lot of shares are out short; Yahoo reports 3.38 million shares as of 4/7/04, representing 12.65% of the float or 6.494 trading days.

No dividend is paid and the last stock split was a 3:2 in July 1994.

What about technicals? Well this stock was trading lower throughout 2000, 2001, and much of 2002, but the "Point and Figure" Chart for WNC shows it breaking through the resistance level in November, 2003, at about $7.5 and then trading strongly higher since that time.

Well what do I think? Thinking about all of the things I have writte, the recent quarter is a mixed report with flat revenue growth and a strong earnings report. Morningstar.com shows that the revenue peaked several years ago, and is still not recovering. Valuation-wise, the P/E is nice..at least going forward, but the PEG is steep at over 3.0. Technically the graph looks nice.

So where are we? This is not a stock that I would be picking for this BLOG. That does not mean it is not a good investment, and I would encourage you to make your own decision on this matter. However, I am looking for revenue growth, earnings growth, excellent balance sheet, and a nice graph. I hope that is not TOO much to ask!

Thanks so much for stopping by! I hope that was useful for you and that you feel free to email me with any questions you may have at bobsadviceforstocks@lycos.com

Bob


Posted by bobsadviceforstocks at 5:49 PM CDT | Post Comment | Permalink

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