Update Following 3Q19 Earnings Call (MMMB)

I don’t think quarterly updates are particularly useful. The thesis remains intact from the previous article, but I figured I’d briefly touch on what I found interesting from the release and earnings call:

1) 2Q Weakness One-Off Blip- If there was any skepticism around managements explanation of a weak 2Q19, this quarter proved it was truly transitory.

2) Operating Leverage- Sales grew at a 12% clip but this drove a 50% growth in EBIT to $536k. Stock is trading close to 10x EBIT going forward, assuming no future growth.

3) Strategic Alternative In 1Q18- Company expects to give update on review underway early in the company’s 1Q2020, which begins 2/1/19.

Investors continue to be in a good position. If the company is purchased as a result of the strategic initiatives, I think it comes at a price about 100% higher than today. If the company remains independent, there is a solid growth runway to a $50-60mm annual sales level.

I hold a position in MMMB. Any article is only opinion and not a recommendation to buy or sell.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s