Click ***HERE*** for my PODCAST on LMI AEROSPACE
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Looking through the list of top % gainers on the NASDAQ today, I came across LMI Aerospace (LMIA) which closed at $18.01, up $1.86 or 11.51% on the day. I do not own any shares nor do I have any options on this stock.
According to the Yahoo "Profile" on LMIA, the company
"...engages in fabricating, machining, finishing, and integrating aluminum and alloy components, and sheet metal products for use by the aerospace, technology, and commercial sheet metal industries."The company reported 4th quarter 2005 results on March 13, 2006. For the quarter ended December 31, 2005, sales came in at $28.8 million, up 28% from $22.5 million in the same quarter last year. Net income for the quarter came in at $2.0 million or $.23/diluted share, compared with $669,000 or $.08/diluted share for the same quarter in 2004. The company announced guidance for revenue in the $125 to $137 million range.
What about longer-term results?
Reviewing the Morningstar.com "5-Yr Restated" financials on LMIA, we can see the fairly steady growth in revenue from $55.7 million to $85.9 million in 2004 and $94.7 million in the trailing twelve months (TTM). With the guidance of $125 to $137 million in 2006, we can see the continued growth of this small company.
Earnings, like so many small companies, has been erratic, with $(.16)/share reported in 2000, climbing to $.36/share in 2001 and dropping to a loss of $(1.03)/share in 2002. The company turned positive again at $.05/share in 2004 and has been improving strongly since.
Similarly, free cash flow which was a negative $(4) million in 2002, improved to break-even in 2003 and $6 million in 2004 and $5 million in the TTM.
The balance sheet is strong. Even though the company has only $100,000 in cash, Morningstar.com reports $41.6 million in other current assets. Balanced against the $13.2 million in current liabilities, this gives us a 'current ratio' of over 3.0. In addition, the combined current assets of $41.7 million is more than enough to pay off both the $13.2 million in current liabilities and the $17.9 million in long-term liabilities combined.
What about some statistics on this company? Reviewing the Yahoo "Key Statistics" on LMIA, we can see first of all that this is a very small company with a market cap of only $149.85 million. The trailing p/e is moderate at 38.81, but recall that the company is just starting to produce profits, and was otherwise losing money until recently. No PEG is reported, presumably because there aren't any analysts (?) out there, at least that Yahoo is reporting, with estimates on this company.
According to the Fidelity.com eResearch website, the company is in the "Aerospace/Defense Products/Services" industrial group. Within this group, the company is priced midway relative to the Price/Sales ratio. Topping this list is Rockwell Collins (COL) with a Price/Sales ratio of 2.6. This is followed by a group of companies topped by LMI Aerospace (LMIA) at 1.4, Orbital Sciences (ORB) at 1.3, DRS Technologies (DRS) at 1.1, EDO Corp (EDO) at 1, and Alliant techsystems (ATK) at 0.9.
Returning to Yahoo for some other numbers, Yahoo reports only 8.32 million shares outstanding with 3.97 million of them that float. As of 2/10/06, there were only 8,220 shares out short representing 0.1 days of trading volume (the short ratio). This short interest does not look significant to me. Yahoo reports no dividends and no stock splits.
What about a chart?
If we review a "Point & Figure" chart from StockCharts.com on LMIA:
We can see that the stock was actually trading lower between 2001 when it was as high as $5.00, down to a low of $1.25 in May, 2004. The stock has broken through resistance at $2.25 and has moved strongly higher since. The chart is actually very bullish and looks strong to me!
So what do I think? This is a small company with a very nice recent quarterly report, a relatively solid Morningstar evaluation, and relatively reasonable valuation. I don't know the business, I don't know the management, but from the available information, the company is attractive for consideration! Due to the small market cap, this stock is likely to be very volatile in price, but if I were in the market to be buying a stock, I just might be nibbling on this one!
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Updated: Wednesday, 15 March 2006 10:34 PM CST