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Monday, September 24, 2007

Two more (WGL and DAAT)

Washington Gas Light Company (WGL, WGLCN, WGLCO, WGLCP, website, sec, yahoo, chart). Ok, so I had considered this a pointless exercise back on March 17, 2007. Let's see if that might have been proven wrong yet.

The long term price chart of the preferred stock still hasn't wiggled around enough to be interesting. The common stock WGL also has gone nowhere.

So far, so pointless.

DAC Technologies (DAAT, sec) They make gun cleaning equipment for Wal*Mart. Vendors should fear Wal*Mart as should their investors. If someone's going to get squeezed, it's going to be the vendors. That's why I've been skeptical about this stock. Keep in mind they had to restate some 2006 results. Q2 results: 6.1 million shares. Inventories are 63% of total assets! AR is 17%, so inventories+AR is 80% of assets! Current ratio is about 2. No significant long term liabilities. Over half equity.

Six Month Results: Revenues are flat. 30% gross margins. 5.6% operating margin. Less than 1.8% net margin. Earned 2 cents diluted for the quarter. SG&Q increased yoy, knocking off 3 cents for the half.

Inventories ate up operating cash flow. They factored about $2 million of receivables. AP helped out cash flow. Capex (effectively on borrowed money) was above depreciation, but both are relatively small.
The Company continues to fight the effects of rising commodity prices on its gross margins.. Gross margins did increase during the second quarter of 2007 to 32% as compared to 29% in the second quarter of 2006.
The Company’s line of GunMaster™ gun cleaning kits continues to be a leader in the gun cleaning market. However, it is becoming increasingly difficult to maintain the tremendous sales growth experienced in this market from 2003 through 2005.
They increased prices to customers in Q2, which is a very good sign (and also an anecdote for the overall inflation picture).

CEO leases part of his Miami home to the business as an office.

This stock doesn't seem all the great. Earnings for 2006 were 12 cents. 2005 earned 10 cents. Maybe the stock is worth $1.00 in my opinion. It might be interesting at 50 cents. The last sale was $1.11.

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