Keeping Fingers Crossed for Fitbit, FreightCar America

 | Aug 02, 2017 | 12:00 PM EDT
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Stock quotes in this article:

fit

,

rail

Today is a big day in value land, as two names near and dear to my heart (but not necessarily my wallet) are scheduled to report after the market's close.

First, Fibit Inc. (FIT) , the down-and-out former growth darling and short-lived cult stock that has seen its shares slide from $48 to $5 in just two short years, will report second-quarter results. Consensus estimates are calling for a loss of 15 cents a share on revenue of $341.5 million. Fitbit posted a mild bottom-line surprise last quarter, with a smaller-than-expected loss of 15 cents a share versus the consensus expectation of an 18.5-cent loss. However, it has not posted a profitable quarter since last October and has been guiding estimates lower as sales suffer.

I'm not sure what to expect here. Even a mild surprise could reinvigorate some investor interest, and expectations are pretty low at this point. Given the train wreck that Fitbit has turned into, the growth crowd has moved on, leaving the bottom-feeding value types such as myself to try and pick up some crumbs, if there are any left.

Currently a double-net (a stock that trades between one and two times net asset value) that is trading at 1.97 times net current asset value, Fitbit ended last quarter with $726 million, or $3.20 per share, in cash and no debt. Despite losses, the company has been cash-flow positive the past two quarters, a trend that can't continue for long if large losses continue to mount. I, for one, likely will bypass the income statement once results are released and head straight for the balance sheet.

Then there is FreightCar America Inc. (RAIL) , a smaller double-net that trades at just 1.26 times net current asset value, which is scheduled to reveal second-quarter results. Operating in a cyclical industry that has been in slowdown mode, the "consensus" (just four analysts here) is calling for a loss of four cents per share on revenue of $107 million. If FreightCar America hits that sales level, it would represent a 15% decline versus the same quarter last year and a 55% decline from the same quarter two years ago.

Somehow, the railcar maker has managed to stay marginally profitable the past three quarters, and we'll get a glimpse today as to whether business is starting to turn around. Talk about a disliked stock: FreightCar America currently has more than half its market cap in cash, carries no debt, trades at 0.85 times tangible book value per share, and yields 2.2%.

It just has not been a great environment for railcars, especially the coal cars produced by the company. Case in point: In 2015, FreightCar America delivered 3,395 coal cars; that number fell to just 43 last year.  But FreightCar AmericaL has lived through quite a few rough environments since its founding in 1901 and seems to have the liquidity to make it through this one.

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