BAMM – Q1:2007 Earnings

BAMM reported its fiscal Q1 results on 5/29/07

Here is what I was looking for when reading the press release:

“For a long position, I am looking for continued operating improvements, lack of insider sales, falling stock price (at roughly $12 the stock would trade at roughly half the valuation of the broad market), positive SSS. To make a short trade I am looking for the opposite to happen.” http://offthebeatenpathinvestments.blogspot.com/2007/05/bamm-final-thoughts.html


Looks like the company continues to improve operationally:
GMargin up 40bps YoY
EBITDA Margin up 55bps to 5.84% YoY
EPS up 44% YoY to $0.13 per share, also beat estimates by 1c and it looks like 2007 full year estimates were raised by 5c to $1.20

From the SSS perspective the company continues to struggle with SSS down 50bps.

At current price of $16.44, BAMM trades at roughly 15x of market value. The company has a lower EV than Market value making the valuation seem a little lower at 12x but due to the nature of the business you could not pull the cash out and still run the business.

I continue to think that the current valuation is to high to provide any margin of safety for a company facing negative SSS in an industry with some serious problems, also I can’t forget the massive insider sales the last time the stock had a decent up move (http://offthebeatenpathinvestments.blogspot.com/2007/05/bamm-da-bears.html)


* DISCLOSURE: I or accounts I manage may be long or short any and/or all stocks mentioned in this post. This is not a recommendation to buy or sell any security. For informational and educational purposes only.