Lots of positives have already been mentioned here, including the new supply contracts, Embraer approval, 2011 water heater acquisition, excellent cash balance, increasing revenue/eps, earnings of 1.4 cents per share in fiscal 2012 (a double from 2011's EPS), unused debt facility and $.40 analyst's target.
I would like to add a few more:
- The company's revenue held up well during the recession, showing the resiliency of its business model.
- Expenses continue to be well controlled even as revenue increases dramatically.
- Although quarterly cash flow was erratic in fiscal 2012 due to an inventory build and increasing accounts receivable (because of increasing sales), overall fiscal 2012 cash flow was excellent. Sometimes, companies growing this quickly can't create that kind of cash flow.
- Short term assets less all liabilities equals 4.4 cents per share.
- The company is currently paying a royalty of 2% of sales to NRC, which amounted to $120k in fiscal 2012. As at year-end, there remains $294k to pay. These royalty payments should end by the end of 2014 and pre-tax net income should increase accordingly. That should add, on an after-tax basis, something like 0.225 cents in EPS. At a 10 p/e, that would add about 2.25 cents to fair value, which is about 16% of the existing stock price.
The growth, the balance sheet, the built-in EPS increase...IWG would seem to be a very compelling investment opportunity.