treva84 wrote: ↑ Well, the fundamentals continue to worsen - ongoing decline in sales and earnings. On the plus side, cash flow is growing greatly which will fund dividend increases and buybacks.
I'm disappointed as a shareholder and I want to sell, but I'm going to continue to hold. Personally I won't be buying more until sales / earnings start to grow again. If cash flow growth stops and turns negative quarter over quarter then I'll sell.
BOS stock price is highly influenced by rubber commidity price, which makes it very hard to evaluate valuation and estimate earnings. Although earnings and sales have been declining, I Was happy to see that such company facing these challenges are growing cash flow and dividends, meeting my primary goal to partner with them, while reducing net debt. Airboss had a big client that was generating 40% of rubber compound volume to them, so they clarified that they have not lost market shares with their existing customer base, it's just a lack of volume from their businesses,hence their approach to diversify to other areas - makes sense. They want to enter in non-automative antivibration market, a $6 Billion annual market that would include everything from locomotives rail to marine to aerospace to earthquake vibration or earthquake prevention to anti vibration products to combined distracters et cetera. So, all products that currently use antivibration, it's a different market than what they are in today, and they believe they can leverage the same technology, the exactly the same engineering, and very similar techniques to solve the problems that they have today. In that market, individual customers tend to be smaller, but the margins tend to be significantly higher. And the part price tends to be a lot higher. Diversifying their business makes sense and when the automative market eventually recovers, that would give them a boost. Airboss increased their active customer base by approximately 18%, while maintaining a robust pipeline of new customers in their development funnel for 2017. Defense is the area where they`re seeing the biggest increase of volume, and they are optimistic on how that will continue.
I`ve added more on Friday and they look fairly valued today. They continue to meet my goals of dividend increase - and I wouldn`t sell them until fundamentals deteriorate or they have 5-year of lower earnings. No company is capable of growing earnings perfectly, specially commodity driven ones like Airboss. I`m happy to get paid while waiting.