RF Industries Ltd. (RFIL) AT 6.32
Fundamental: 7
Chart: 6
Dec 5, 2006
RF Industries, Ltd. (RFI) provides wired and wireless solutions
for the telecom and biomedical markets. It operates through
five divisions: RF Connector and Cable Assembly, Aviel Electronics,
Neulink, Bioconnect, and Worswick. RF Connectors and Cable
Assembly division designs and distributes radio frequency
(RF) coaxial connectors and cable assemblies used for Wi-Fi,
PCS, radio, test instruments, computer networks, and antenna
devices. Aviel Electronics division provides custom microwave
and RF Connector solutions to aerospace, OEM, and government
agencies. Neulink division designs and markets RF modems,
telemetry transmitters, and receivers for industrial monitoring,
wide area networks, GPS tracking, and locations systems. Bioconnect
division operation designs, manufactures, and distributes
patient monitoring cables and leadwires to the medical monitoring
market. Worswick Industries division distributes and sells
short-run coaxial, computer, and wire harness assemblies primarily
for local multimedia and communications customers.
The market cap on RFIL is small at $21.72 million with 2.84
million shares in the float. As of July 31, 2006, RFIL reported
a total of $7,232,000 in liquid and short-term near-liquid
resources, which is $2.25/share with no debt.
The Q3 2006 earning is summarized below:
- For the three months ended July 31, 2006, net sales jumped
20% to a record $3,920,000 and net income increased 110%
to $407,000, or $0.11 per diluted share.
- In the same quarter last year, net sales set a third quarter
record $3,277,000 and net income was $194,000, or $0.05
per diluted share.
- For the nine months ended July 31, 2006, net sales increased
14% to a record $11,064,000 and net income increased 89%
to $1,067,000, or $0.29 per diluted share. In the same period
last year, net sales were $9,723,000, and net income was
$564,000, or $.15 per diluted share.
- Third quarter gross margin improved to 49% of sales compared
to 45% of sales in the third quarter last year. Tighter
cost and expense controls instituted in the second quarter
of fiscal 2006 helped reduce third quarter selling and general
expenses to 29% from 32% of sales in the third quarter last
year.
- Stockholders' equity of $12,744,000 or $3.97 per share.
From the Q3 earning, I see the perfect formula for profitability
as top line sales increases and reduction in expenses. The
gross margin improvement is a product from the formula.
The 200Ma is acting as a solid support for RFIL. It's in
the process of consolidation at the $6.50 range, and it should
continue to do so until the next earning release, which will
be January for the 2006 Q4 and full year earning. RFIL reminds
me of ANGN as earning improves and the outstanding shares
are similar. If RFIL releases another exceptional Q4 earning,
it will trade back to the high 9s again. The short term target
before earning is $7.50. The best entry price on RFIL is around
6.50 with a stop loss of $6.15.
