February 13, 2012 PSW Staff |
promotional and marketing firm operating mainly in the U.S. With just 275 employees, the company's sales were over $115 million in 2011, and are north of $95 million so far for the first nine months of the company's fiscal 2012 ending in March. The company has a market cap below 8 million, and the stock is very lightly traded. Trailing 12 month sales are in at $125 million, and are up 51% year over year. Net income is at $2.5 million for the last year, which is an 83% increase. As good as these numbers are, the real story is from the last three quarters, where net income is at $3.8 million. The company's most recent quarterly filing showed a huge increase in revenue to $36 million, and the fourth quarter looks to be on track for similar or even better numbers. MKTG, Inc. announced that at the beginning of the current quarter in January, they opened a new office in London, and will see immediate revenue derived from its existing customers looking to utilize the services abroad. According to the company's most recent filing, 8.16 million shares are issued and outstanding. Before we get excited about valuations, we need to keep two things in mind. With some convertible warrants issued and preferred shares potentially being unleashed, the fully diluted share count is closer to 16 million. Also, despite being below a dollar, the stock is thinly traded, and has large spreads between the ask and bid. Currently, one should not expect to be able to get into a position below a dollar. So even if we use the 16 million share count and a stock price of $1.00, valuations are still ridiculously low. With just a similar quarter to its most recently reported one, trailing twelve month revenues would be north of $130 million, and net income would be at 5.3 million, or 33 cents a share. That gives us a maximum current P/E of 3, and with the stock barley budging after the last quarterly report, it is clear that it is under-followed and completely off the radar. The balance sheet is strong and getting stronger. Both assets and liabilities shrank a bit during the last most recently reported quarter, but retained losses shrank and shareholder equity climbed. The company has no long term debt, other than the warrants, and has over $6 million in cash. The company generated more than $1 million in cash in the third quarter alone. Also available, is a $4 million credit facility that as of December 31, 2011, was fully available. With over $10 million sitting around, the company appears capable of continuing and growing operations for the foreseeable future. MKTG, Inc.'s business comes from a variety of niche marketing services and promotional programs through online and offline channels. These services include experiential and face to face marketing, event marketing, interactive marketing, ethnic marketing, and all elements of consumer and trade promotion. Part of this company's recent success stems from a growth in its experiential marketing business, which is currently the fastest growing sector in the overall marketing industry. According to the International Experiential Marketing Association: “Experiential marketing allows customers to engage and interact with brands, products, and services in sensory ways that provide the icing on the cake of providing information. Personal experiences help people connect to a brand and make intelligent and informed purchasing decisions. The term 'Experiential Marketing' refers to actual customer experiences with the brand/product/service that drive sales and increase brand image and awareness. It's the difference between telling people about features of a product or service and letting them experience the benefits for themselves. When done right, it's the most powerful tool out there to win brand loyalty.” This stock definitely seems undervalued and the company is growing rather than shrinking. Care needs to be taken when executing transactions in lightly traded stocks, however, and for now, CMKG is one of them. Right now, the stock may be easy to buy and hard to sell, but if things continue on the current course, the opposite may soon be true. |
Exclusive Articles Portfolio Archives Help |
|
|
 | |  | |  | |  | |  | |  | |  | |  | |  |
|