VOXX Doesn't Knock Traders' Socks Off

 | Jul 11, 2018 | 10:00 AM EDT
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As earnings season starts to heat up, we got our first glimpse yesterday of results from the nether regions of the markets, when off-and-on net/net (stock trading below net current asset value) VOXX International (VOXX) revealed its first-quarter results. The stock had been on a nice little run, up 23% the past three months, but gave a chunk of that back in early trading Wednesday as investors appear to be displeased with Q1 results.

VOXX reported revenue of $100.8 million for the quarter, down 12% year over year, and a loss of four cents per share. Unfortunately (or fortunately, at least in my view), there was no consensus estimate for VOXX for the quarter; there is just one analyst who sometimes covers the name. That leaves quarterly success or failure squarely in the eyes of the investor, a situation that I sometimes prefer. With little analyst or media coverage, there is opportunity to discover compelling information that others may not see. That intel can get you to the party early, if there is one, and of course, if you are correct in your assumptions.

There was some good news for the quarter; automotive segment sales rose 7% to $39.6 million. There was also some not-so-good news as the consumer accessories segment saw a 28% drop in revenue to $28.7 million, while premium auto segment sales fell 14% to $37.7 million. Overall, gross margins improved 110 basis points to 27.4%, which was a positive.

The balance sheet remained solid, as VOXX ended the quarter with $53.2 million, or $2.20 per share, in cash and investments. Cash fell by just $1.9 million during the quarter, so VOXX is not burning through all that much cash as it attempts to get back to profitability. Debt stood at just $17 million.

At Tuesday's closing price of $5.90 following a 6% gain in regular trading, VOXX traded at 1.03x net current asset value based on Q1 balance sheet data. However, with the stock down more than 10% at the outset, it likely will be back in net/net territory today.

Our next glimpse of results for investable net/nets will happen next week (July 19) when Richardson Electronics (RELL) is expected to report fourth-quarter results. RELL has been on a nice tear so far this year, up 44% year to date, after returning to profitability. RELL currently trades 0.98x net current asset value and ended its latest quarter with $60 million, or $4.65 per share, in cash and no debt. The stock is a very rare example of a dividend-paying net/net, which currently yields 2.5%.

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