Kemet is up 96% this year. More from the February low.
From the 10-K:
"KEMET Corporation ("we", "us", "our", "KEMET" and the "Company"), is a global manufacturer of passive electronic components. Through the above acquisitions and organic growth we have expanded our product base to include multilayer ceramic, solid & electrolytic aluminum and film capacitors. We compete in the passive electronic component industry, specifically multilayer ceramic, tantalum, film and aluminum (solid & electrolytic) capacitors. Product offerings include surface mount, which are attached directly to the circuit board; leaded capacitors, which are attached to the circuit board using lead wires; and chassis-mount and other pin-through-hole board-mount capacitors, which utilize attachment methods such as screw terminal and snap-in. Capacitors are electronic components that store, filter, and regulate electrical energy and current flow. As an essential passive component used in nearly all circuit boards, capacitors are typically used for coupling, decoupling, filtering, oscillating and wave shaping and are used in communication systems, servers, personal computers, tablets, cellular phones, automotive electronic systems, defense and aerospace systems, consumer electronics, power management systems and many other electronic devices and systems (basically anything that plugs in or has a battery)."
Nothing to get excited about here. It is a commodity producer of capacitors and growth has been non-existent. Gross Margins are low but have been improving over the last few quarters despite poor top line growth
Sales in 2012 were $924MM, 2015 sales were $735MM. Now there may have been divestitures over the years, so this drop is sales might not all be for the core business. I have not checked, but it doesn't look like a great business so far.
For the latest quarter:
"Net sales of $187.3 million for the quarter ended September 30, 2016 increased 1.3% from net sales of $184.9 million for the prior quarter ended June 30, 2016 and increased 0.6% from net sales of $186.1 million for the quarter ended September 30, 2015."
Okay so sales are flat. Why is the stock up so much? The semi stocks are in rally mode, which might explain part of it. Also margins have gone up:
"The non-U.S. GAAP adjusted net income was $7.0 million or $0.13 per diluted share for the quarter ended September 30, 2016 , an improvement of $3.7 million compared to non-U.S. GAAP adjusted net income of $3.3 million or $0.06 per diluted share in the quarter ended June 30, 2016 . For the quarter ended September 30, 2015 , the Company reported non-U.S. GAAP adjusted net income of $4.3 million or $0.09 per diluted share. "We continue to meet or exceed our forecast, improve operating margins, and build our cash balance," stated Per Loof, KEMET's Chief Executive Officer. "We announced further gross margin improvement actions this quarter that we expect will help us to maintain our gross margins at this level or higher. We have created significant operating leverage and are positioned well in our market segments and regions," continued Loof."
So there's an expanding margin story here due to extracting efficiencies on the cost side. Not something that has too much more potential in a low margin business but should be interesting to see if business performance improves in line with the stock price.
Stock might just have been oversold and is now over bought. Not a business that gets me too excited for its potential to surprise to the upside.
From the 10-K:
"KEMET Corporation ("we", "us", "our", "KEMET" and the "Company"), is a global manufacturer of passive electronic components. Through the above acquisitions and organic growth we have expanded our product base to include multilayer ceramic, solid & electrolytic aluminum and film capacitors. We compete in the passive electronic component industry, specifically multilayer ceramic, tantalum, film and aluminum (solid & electrolytic) capacitors. Product offerings include surface mount, which are attached directly to the circuit board; leaded capacitors, which are attached to the circuit board using lead wires; and chassis-mount and other pin-through-hole board-mount capacitors, which utilize attachment methods such as screw terminal and snap-in. Capacitors are electronic components that store, filter, and regulate electrical energy and current flow. As an essential passive component used in nearly all circuit boards, capacitors are typically used for coupling, decoupling, filtering, oscillating and wave shaping and are used in communication systems, servers, personal computers, tablets, cellular phones, automotive electronic systems, defense and aerospace systems, consumer electronics, power management systems and many other electronic devices and systems (basically anything that plugs in or has a battery)."
Nothing to get excited about here. It is a commodity producer of capacitors and growth has been non-existent. Gross Margins are low but have been improving over the last few quarters despite poor top line growth
Sales in 2012 were $924MM, 2015 sales were $735MM. Now there may have been divestitures over the years, so this drop is sales might not all be for the core business. I have not checked, but it doesn't look like a great business so far.
For the latest quarter:
"Net sales of $187.3 million for the quarter ended September 30, 2016 increased 1.3% from net sales of $184.9 million for the prior quarter ended June 30, 2016 and increased 0.6% from net sales of $186.1 million for the quarter ended September 30, 2015."
Okay so sales are flat. Why is the stock up so much? The semi stocks are in rally mode, which might explain part of it. Also margins have gone up:
"The non-U.S. GAAP adjusted net income was $7.0 million or $0.13 per diluted share for the quarter ended September 30, 2016 , an improvement of $3.7 million compared to non-U.S. GAAP adjusted net income of $3.3 million or $0.06 per diluted share in the quarter ended June 30, 2016 . For the quarter ended September 30, 2015 , the Company reported non-U.S. GAAP adjusted net income of $4.3 million or $0.09 per diluted share. "We continue to meet or exceed our forecast, improve operating margins, and build our cash balance," stated Per Loof, KEMET's Chief Executive Officer. "We announced further gross margin improvement actions this quarter that we expect will help us to maintain our gross margins at this level or higher. We have created significant operating leverage and are positioned well in our market segments and regions," continued Loof."
So there's an expanding margin story here due to extracting efficiencies on the cost side. Not something that has too much more potential in a low margin business but should be interesting to see if business performance improves in line with the stock price.
Stock might just have been oversold and is now over bought. Not a business that gets me too excited for its potential to surprise to the upside.
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