I have mentioned ELY (Callaway Golf) before - it's a management turnaround story. During the day, there were reports of layoffs, and the stock fell (6.20 to 5.70). After the close, the company confirmed the layoffs and pre-announced. Sales were 280mm instead of 285mm, but EPS hit the .05 consensus.
The new plan is going to hit the balance sheet by $40mm (1/2 cash, 1/2 write-downs) but generate $52mm per year in cost savings. To frame this, there are 65mm shares roughly. The company has no debt and cash is $52mm. Tangible book value is (was) over $400mm.
After-hours, the stock is down more! It's offered near 5.40. Let's use $6 for the analysis, cuz that's where the stock should trade in the short-term.
- TBV is currently 6.29
- After adjusting for the restructuring, it drops to 5.70 roughly
- Company still has cash and no debt afterwards.
- Earnings in 2013 were forecast to be only .09
- IF the company succeeds and reduces costs by $52mm, this boosts EPS to .60 or so
Given how successful the new CEO was and the power of this brand, I think 10PE on 2013 potential is a real bargain...
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