PMFG

[David Randolph]

Analysis on May 11th, 2007:

PMFG's brief technical & fundamental analysis:

Boy, was I wrong to be bearish on this one ... fundamentals improved dramatically over the last few quarters:

• Peerless Mfg. Co. Reports First Quarter Fiscal Year 2008 Financial Results
PR Newswire (Tue, Nov 6)

I find the following part especially interesting:

«The Environmental Systems segment revenues for the first quarter of fiscal year 2008 were $16.3 million, an increase of $11.7 million compared to revenues of $4.6 million for the first quarter of fiscal year 2007. The Environmental Systems segment operating income was $4.6 million for the first quarter of fiscal year 2008, an increase of $3.7 million, compared to an operating income of $932,000 for the first quarter of fiscal year 2007.»

I would like to learn more about this "Environmental Systems" segment. On the other hand, the company made $0.52 EPS for the quarter, so it looks cheap on an earnings multiple comparison (it looked expensive when I made the initial analysis - I've been learning that when stocks have rich multiples, many times that's for a good reason and the opposite is usually also true - so it pays to investigate why stocks are "cheap" and why they are "expensive").

[David Randolph]

After 74 years of history and at least 27 years in the stock market it seems the time has finally come for PMFG, look at the following long term chart:



I wish I've seen it earlier ... anyway, I believe the company's business description on Yahoo Finance and the latest earnings release fully explain the huge advance.

The latest two quarters were particularly strong, with Q2 EPS of $0.63 and Q3 EPS of $0.52 (there's positive seasonality in Q2, but not in Q3). Annualizing this I get $2.30 EPS for a full year, so with the stock at $35.5, it is trading at about 15.4 times earnings while it grew them about 7 fold from the year ago levels.

It appears PMFG is still a valid long term investment idea, here at a $233 M market cap. It's a pity the stock almost has no volume, just 2,700 shares traded so far today.

I'm enthusiastic about PMFG's business, just one thing holds me back. This S-8 form showing 16% dilution for director's compensation. It's too much ...

[David Randolph]

After a correction to the 200 days SMA, PMFG is jumping higher again, approaching its all time high set at $41.64.

What's happening in phase 1 on the chart below? Were there any news out?

I don't see any recent news ... it looks like people support this company because its business is connected with the defense of the environment.

It's a pity volume is very low, just 31,700 shares traded yesterday.