dexo - q1 prediction from sa

Reports tomorrow before market open.

From Seeking Alpha

Revenue: the company indicated that revenue will be slightly lower than Q4, 2011. Therefore we give $350 million as our estimate.

Cost maintains as the same margin (18.70%).

I project a further reduction from their S&A expenses: from 38.97% to 37.1% with higher D&A cost ($73 million) and the same amount of interest payment ($55 million).

Net profit before income tax will be $26.53 million, about 10% higher than Q4, 2011 result.

I have no idea how much the company will pay for the income tax and will leave it blank here.

I project 50.25 million shares by the end of Q1, 2012.

Therefore net profit will be .52/share for Q1, 2012 before income tax provision and one-time gain.

During the first quarter, 2012, company bought back $142 million of its debt using $70 million cash. This will give $72 million or $1.44/share one time gain .

Therefore the company may report $1.96 EPS before income tax provision.

Book Value: $140 - $9 million + $20 million (Q1 net profit) = $151 million = $3.00/share.

Stock has lost about 50% of its value since its recent high of $2.48. At $1.25, I believe that it is undervalued and will be a good entry price for long term investors.

**Disclosure: **I am long DEXO.

Stocks: DEXO