Seeking Alpha: Profitable with Growing Sales, Cemtrex Can Shed Its Microcap Suit
December 17 2014 - 1:34PM
Business Wire
Cemtrex Inc. (OTC:CTEI) was recently highlighted in an article
by Payal Gupta of Seeking Alpha. The following are highlights from
the recent feature:
In a world where investors are used to hearing about heavy
premiums for acquisitions, Cemtrex seems to have gotten a deal in
buying ROB Group as the company was languishing financially and
needed an exit strategy due to an insolvency debacle because a
customer defaulted on a large payment. With favorable, non-dilutive
terms, via a bank loan that carries only 3% interest and a 17-year
repayment term, Cemtrex came in and bought the company at roughly
half of ROB Group's book value. To avert any such payment debacle
from happening again, Cemtrex has put in place a policy that all
orders and receivables are covered by a major insurer.
The fastidious acquisition translated to Cemtrex generating
$47.65 million in revenue in the 12 months ended September 30,
2014, a 249% increase versus $13.67 million in the year prior
period. Net income was up a stunning 834% to $2.69 million, or 7
cents per share, compared to net income of $288,497 in the same
period a year earlier.
Shares of CTEI have bounced around lately between $0.60 and
$0.74, but even taking the high end of that range equates to a
market capitalization of only $30.04 million. Moreover, Cemtrex can
be evaluated in a way many OTC companies can't: through a TTM
price-to-earnings ratio, which at $0.74 equates to a P/E ratio of
10.6:1 for Cemtrex. At $0.64, the P/E ratio drops to 4.7:1,
according to data from QuoteMedia.
Looking at the Pollution & Treatment Controls industry shows
an industry P/E ratio of 64:1. Now, to be fair, that figure is
skewed upward by some foreign companies, but looking directly at
US-listed comparables shows only MFR, Inc. (NASDAQ: MFRI) has
a P/E ratio lower than Cemtrex at 4.9:1, in part because MFR swung
to a net loss of $0.4 million in Q3 compared to a net profit of
$7.4 million in the year prior quarter as sales decreased 24% to
$43.8 million. Trading Tuesday at $7.41, shares of MFRI are off a
March high of $17.44 by 57.5%. P/E ratios for other U.S. companies
in the pollution treatment industry generally range from around
15:1 - 25:1.
The P/E ratio for the Industrial Electrical Equipment industry
is 25.7:1, with a similar structure to the Yahoo list and most in
the area of 20:1. Yahoo has Cemtrex officially listed in the
smaller industry of Industrial Equipment and Components where the
industry P/E is 127.1:1. Even the broader sector of Industrial
Goods has a P/E ratio of 19.9:1. Point here is to take a look at
several surrounding industries, rather than the IE&C industry
exclusively to demonstrate the valuation that can certainly be
construed as on the low end compared to peers.
Cemtrex is building a marquee company specializing in advanced
industrial and manufacturing technologies. The balance sheet is
clean, albeit light on cash ($1.3 million in cash and equivalents),
with $4.6 million in receivables as of September 30 and shareholder
equity of $3.28 million. That equity has reversed course from a
deficit of $916,000 in four years against the backdrop of 1,000%
growth in revenue. With domestic and international operations,
Cemtrex's business is scalable and ultimately still running well
below capacity as it ramps up sales in very diverse, multi-billion
dollar markets. The business model, high insider holdings (73%),
growing profitability and customers such as Siemens, BP, Shell,
General Electric, BASF, DuPont, Corning and Mitsubishi (to name a
few) help mitigate risk and identify Cemtrex with class as an
anomaly in the OTC world. Sporting a somewhat humble demeanor, the
company will not skirt under the attention of Wall Street
forever.
To see the entire article please visit:
http://seekingalpha.com/article/2757075-profitable-with-growing-sales-cemtrex-can-shed-its-microcap-suit
About Cemtrex, Inc.
Cemtrex, Inc. (CTEI) is a diversified technology company that
provides a wide array of solutions to meet today's industrial
challenges. Cemtrex, through its wholly owned subsidiaries provides
electronic manufacturing services of custom engineered printed
circuit board assemblies, emission monitors & instruments for
industrial processes, and environmental control & air
filtration systems for industries & utilities.
www.corporate.cemtrex.com
Safe Harbor Statement
This press release contains forward-looking statements. Actual
results could differ materially from those projected in the
forward-looking statements as a result of a number of risks and
uncertainties. Statements made herein are as of the date of this
press release and should not be relied upon as of any subsequent
date.
Investor RelationsCemtrex, Inc.Saagar Govil, 631-756-9116