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Sven Monberg Highlights the Following Stocks: Cubic Corp. CHICAGO, Sep 15, 2003 (BUSINESS WIRE) -- Faster than a speeding bullet, more powerful than a locomotive, it`s the next stock recommendation from Superstock Investor. Learn about: Cubic Corp. (AMEX: CUB). Click here for the full story exclusively on Zacks.com: http://featuredexpert2bw.zacks.com/ Here are the highlights from the Featured Expert column: Cubic (AMEX: CUB) announced on August 21st that its intent to acquire ECC International Corp (AMEX: ECC) for $5.25 per share in a transaction valued at around $42MM. This price was only a 3% premium to ECC`s closing price on the day before the announcement, but about a 20% premium to where the stock traded two weeks before its recent run-up. ECC would likely have qualified as an example of what Michael Brush, who writes for MSN Money wrote about recently. His article discussed the not very uncommon phenomenon of takeover targets running up in price prior to any specific announcement of a deal entitled "Wall Street Plays Dirty Despite Cleanup effort". With takeovers more frequent over the past six months, time and again the shares of buyout targets have jumped on big volume before acquisition news. According to the article, the unavoidable explanation is that individuals familiar with corporate dealings are trading on their privileged knowledge. Like any acquisition, CUB`s ability to assimilate ECC`s businesses efficiently is probably the most significant issue. Cubic last made an acquisition in September 2001, and it was relatively small. It is likely that investors will question the company`s ability to effectively integrate ECC smoothly. ECC`s business, however, is not that complex when compared to the simulator systems CUB has designed, built and supports. Also, Cubic management strikes me as quite methodical and not prone to making a move of this nature without the proper due diligence. It is probable that Cubic will be able to quickly close this deal and integrate the company. The Wall Street consensus appears to believe that Cubic is paying a fair and attractive price for ECC which brings up the potential of another bidder emerging with a better offer for ECC, though it is hard to visualize a competitor that could offer ECC a better strategic fit than with Cubic. This is an all-cash deal valued at $42 million, implying that Cubic is paying very reasonable multiples of $42 million for $6 million in EBITDA, a multiple of about 7, and $42 million for $33 million in trailing twelve month revenue or a multiple of 1.3. The multiples look even better when ECC`s nearly $7 million of cash is taken out of the calculation (without cash -- 5.8 multiple to EBITDA and 1.1 multiple to sales). ECC`s operating margins were approximately 11% for trailing twelve months, but only about 7% in its fiscal fourth quarter for 2003 ending in March. Cubic expects to enjoy some immediate synergies through the elimination of ECC`s pubic company obligations and other redundant corporate expenses. I would not anticipate any earning revisions related to the ECC acquisition for sometime, until CUB demonstrates or gives specific guidance to the effect that it has been able to improve ECC`s margins. In the meantime, ECC has net operating losses that CUB can use to lower it effective tax rate, boosting retained earnings to some degree. Cubic has made reference to building on current defense relationships to do similar software design work for the Defense Threat Reduction Agency (DTRA). DTRA is at the heart of the federal government`s Homeland Security initiatives. Cubic`s defense arm is one of five companies that will share in an initial new DTRA contract valued at up to $1.26 billion. Cubic says the companies will work on projects designed to reduce the chances of the country being attacked by weapons of mass destruction. The contract has an initial five-year term and a five-year extension option. Cubic appears well positioned to win a significant share of this business as the department`s doctrine is better developed. Cubic is continually evolving its smart card system to employ more useful features. Cubic will deploy a point-of-sale network comprised of credit/debit terminals integrated with Cubic`s Tri-Reader and the IT and communications infrastructure needed to link merchant transactions to the Nextfare Central System. As many as 500 point-of-sale terminals are planned to be installed at strategically located retail outlets throughout the region, making it easier and more convenient to purchase and reload value onto smart cards. To get the entire stock analysis and recommendations from Superstock Investor, click: http://featuredexpert3bw.zacks.com/ About Zacks Featured Experts To be a successful investor you need professional advice. Experts who know what they`re talking about and can help you achieve your financial goals in good markets...and especially in bad ones will help you improve your portfolio. That is why Zacks Investment Research has assembled the best investment experts in the business to offer their powerful advisory newsletters to you on all the major investment topics: Stocks, Mutual Funds, Bonds, Options, Futures etc. Recommendations from Featured Experts Highlighted in FREE Investment Newsletter The best way to tap into the powerful advice from these experts is through our free weekly e-mail newsletter, "Profit from the Pros". Each week we highlight several Featured Experts in this free e-mail newsletter. 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Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security. SOURCE: Zacks.com |
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| aus der Diskussion: | grossauftrag für cubic |
| Autor (Datum des Eintrages): | frank55 (15.09.03 18:32:44) |
| Beitrag: | 101 von 143 (ID:10738044) |
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