Small cap power: CIMT

[David Randolph]

Very bad day for CIMT, closing down 7.8% on volume above average of 67,500 shares. The stock closed below the 50 days and the 200 days moving averages.

I'm going to blame it on the general market weakness and people's desire to get out of all stocks, good and bad. The volume picking up is actually a good sign, with bulls showing up to buy when the stock trades around $2.

Fundamentally the company was profitable over the past three quarters and I expect the 3rd and 4th quarters to be even stronger. In Q3 or Q4 CIMT will, in my view, post a $0.10 EPS number and then it will jump to values above $5, at least that.

I'll continue holding CIMT for the long term.

[David Randolph]

The $2 support zone provided a 2% bounce for CIMT. I wonder if/when the company will announce another acquisition, that could also be the catalyst for a big upside day:

«Mr. Rimon Ben-Shaoul, Chairman of the Board of Directors of Cimatron said, "We believe that Cimatron is now well positioned to further increase its market share and accordingly its revenues in order to become a larger player in the industry. Following the exercise of the option to increase its holding in Microsystem to 51%, Cimatron continues to consider M&A opportunities, as part of its general growth strategy to further increase its offering and global presence."»

I'll keep holding CIMT.

[David Randolph]

CIMT started the day very well, rising by more than 10% at one point, but then people saw the rally as an opportunity to sell on strength, an opportunity they didn't have elsewhere, so they sold.

The stock is trading within a symmetrical triangle, we'll see which way will it breakout.

Fundamentally, CIMT is a global niche player which should benefit from worldwide manufacturing growth and its new product offering. The company was profitable for three quarters in a row, and that is the first time this happens since it become a publicly traded company back in 1996.

Q3 numbers will probably be quite strong due to the Microsystem consolidation. Q4 is seasonally the strongest quarter, so it should come out strong too, with Cimatron version 8.0 in full power.

[pinoleropuro]

so, is it a good bet to double down now before the third quarter results?

[DragonAMG]

so, is it a good bet to double down now before the third quarter results?

I'm thinking the same thing... what are your thoughts David?  Mainly about the third quarter because I know you don't recommend dollar cost averaging.

[David Randolph]

so, is it a good bet to double down now before the third quarter results?

I think it is a good idea to buy CIMT before the 3rd quarter earnings release (because it will probably be a blowout quarter), however I always respect a money management policy that doesn't allow me to average down or up on any single stock position. This is because I need to be diversified throughout 14-15 different holdings to be full invested.

I'm thinking the same thing... what are your thoughts David?  Mainly about the third quarter because I know you don't recommend dollar cost averaging.

I believe the 3rd quarter has the potential to be our "$0.10 EPS or more" EPS quarter which would take the stock immediately to the $5-$6 range. This is because CIMT will have Microsystem's help and probably the 3rd quarter will be a very good one for Microsystem, from what CIMT disclosed in the conference call.

I'll continue holding CIMT for the long term.

[Se7en]

New contract!

Cimatron Speeds up Prototype Manufacturing at MAHLE Group
Monday August 20, 9:00 am ET 
World Leading Automotive Supplier MAHLE Group Uses Cimatron CAD/CAM for Concurrent Design and Manufacturing of Prototype Tools


GIVAT SHMUEL, Israel, August 20 /PRNewswire-FirstCall/ -- MAHLE Group, one of the top 30 automotive suppliers worldwide, has successfully implemented Cimatron's (NASDAQ: CIMT - News) integrated CAD/CAM solutions to speed up its prototype production operations.


To address a growing demand, MAHLE Group has added prototype manufacturing to the portfolio of services it provides to its automotive customers. "Prototyping is a critical and challenging phase in the process of automotive part manufacturing nowadays," said Ulrich Boch, manager of the prototype and utilities shop at MAHLE Group. "We often need to have the prototype ready in a very short order, even before the design is completed."

With such demanding time pressures, MAHLE was looking for a CAD/CAM solution that would not only reduce the time of individual tasks but also streamline the entire process from design to production. With frequent engineering changes occurring at the prototype phase, MAHLE needed a system that could allow such changes to be quickly and safely incorporated into existing designs.

Ulrich Boch explained the selection of Cimatron: "Looking back, Cimatron was the right choice for us. We desired to have a continuous system throughout the tool shop, starting from the design up to the milling machine. Cimatron is offering this continuity, as well as the interfaces for Catia and ProE which allow us to exchange product design data."

Functionality and ease-of-use have also played an important role in the selection of Cimatron as the system of choice at MAHLE. "The option to generate a tool set with only a few clicks and the ability to link to standard catalog components of all major manufacturers is highly appreciated by our users," said Marco Brosemer, manager of the tool making shop at MAHLE. "In addition, we find the Quick Compare functionality a key capability for prototype tool making."

Cimatron's Quick Compare functionality reduces the time and effort required to manage and implement engineering changes. The software analyzes and displays changes in design between different versions, allowing the designer to decide which changes to incorporate into the project. Steps that have previously performed, such as the separation of shapes, need not be repeated.

MAHLE's prototype tooling capabilities have increased considerably since it started offering the service. "Our tool shop began producing small tools four years ago; today, the largest tools can reach the dimensions of 800 x 1000 mm and mold clamping forces of up to 800 tons. The Cimatron software has been a significant enabler of our success in building up these capabilities in such a short time," said Boch.

About MAHLE

With an annual turnover of more than 4.3 billions Euros (5.8 billions USD) in 2006, the MAHLE Group is one of the largest automotive suppliers in the world. Being the leading manufacturer of components and systems for the combustion engine and its periphery, MAHLE is ranking among the top 3 system suppliers of piston systems, cylinder components, valve drive systems, air management systems, and liquid management systems. The company employs more than 40,000 people at 110 production sites and seven research and development centers.

http://biz.yahoo.com/prnews/070820/uksu001.html?.v=74

[pinoleropuro]

I wonder what made it come back down? it was at 2.85 at one point? hmm

[BigSully1]

I wonder what made it come back down? it was at 2.85 at one point? hmm

It was? I've only got 2.391 for the high.

[pinoleropuro]

when i pulled the quote from my pda phone that is what  i got. dunno? hmm

[pinoleropuro]

i just checked the yahoo board and the bashers are relentless  what's it going to take for these guys to stop? i even saw la onda posting now. its crazy!

[David Randolph]

New contract!

Hi Se7en, thanks for posting the press release out at 9:00 ET:

• Cimatron Speeds up Prototype Manufacturing at MAHLE Group
PR Newswire (Mon 9:00am)

I wouldn't call this a "new contract", but just another costumer added to the 20,000 plus CIMT already had in its history.

I think they issued the press release to show their products are being used by large corporations like MAHLE, but it doesn't have a material impact on revenues or earnings, because a software license probably costs about the same for small or large costumers (about $15,000 for each software license).

I wonder what made it come back down? it was at 2.85 at one point? hmm

It was? I've only got 2.391 for the high.

I also have $2.391 as the high of the day. It is the top of a symmetrical triangle.

For tomorrow I have a technical support at $1.93 and resistance at $2.34.

i just checked the yahoo board and the bashers are relentless  what's it going to take for these guys to stop? i even saw la onda posting now. its crazy!

I guess a "$0.10 EPS quarter" will just kill all bears in CIMT. I believe that's coming in Q3 or Q4, everything is setting up for a blowout quarter. With a "$0.10 EPS quarter" it will be easy to justify CIMT trading between $6 and $8, so I guess at least $5 will be guaranteed if the numbers are achieved.

Over the next updates we'll study what will be needed, in terms of revenues and net profit margin, for CIMT to have such an outstanding quarter.

[David Randolph]

Over the next updates we'll study what will be needed, in terms of revenues and net profit margin, for CIMT to have such an outstanding quarter.

Since CIMT has 7,967,000 shares outstanding, it will need to have net income of $796,700 to achieve $0.10 EPS in one quarter.

If we consider 10% revenue growth from Q3 2006 (growth was at 9% in Q2), when the company had revenue of $5,014,000, we'll get Q3 2007 revenue at $5,515,400 for CIMT alone. But we'll also have Microsystem contributing to Q3 numbers, where CIMT has a 51% stake. Since Microsystem annual sales are about $10.5 M, I figure it will be about $2.5 M in Q3 2007. 51% of this is $1.275 M.

Adding CIMT's and Microsystem's expected revenues I get a Q3 revenue estimate of $6.79 M.

For CIMT to achieve the $0.10 EPS, or $796,700 net income, it will need to have a net profit margin of 11.73%. CIMT never achieved this, the highest it had was 9.24% in Q4 2006. So, $0.10 EPS isn't impossible, but perhaps not attainable in Q3 2007.

Maybe we'll get just a $0.06 - $0.08 EPS quarter in Q3 and only in Q4 we'll get the $0.10 plus quarter, with seasonality affecting the numbers in a positive way.

Longer term I can only see CIMT growing more and expanding its net profit margin, since the major R&D effort is behind us. I'll continue holding CIMT for the long term.

[pinoleropuro]

would you say then that it could possibly close the gap down to around $1.38/share? short term that is.
I sure hope that is not the case.
I am tired of the basher on yahoo board being right.

[tokyopua]

would you say then that it could possibly close the gap down to around $1.38/share? short term that is.
I sure hope that is not the case.
I am tired of the basher on yahoo board being right.

The $.10 EPS estimate David made would boost the stock up to $6 to $8 per David, but I only see the gap closing if they posted a decline YOY or negative EPS.  But anything greater than zero would only test the recent lows IMO, not fill the gap.

BTW, not sure why you would be tired of the basher "being right" because for the most part he is wrong daily, he has been calling for $1.40 or $.99 by tomorrow or next week for months now, calls for low closes that never happen, etc..  Seems to me he is always WRONG lol. 

But in general, Im tired of the basher too, but I realize that he or she is either from another company, is literally insane, or is a paid basher or short.  Nothing else can explain that much effort to bash a microcap.