Provident Equity Research Announces Investment Opinion on Key Technology Inc.Business Editors NOTE TO EDITORS: The following is an investment opinion issued by Provident prov·i·dent adj. 1. Providing for future needs or events. 2. Frugal; economical. [Middle English, from Latin pr Equity Research PHOENIX--(BUSINESS WIRE)--July 2, 2003 Summary reports also available for Capital Title Group and Alpha Pro Tech Ltd. Provident Equity Research (PER), an independent equity research company, has initiated coverage of Key Technology Inc. (KTEC KTEC Kansas Technology Enterprise Corporation ). Key Technology Inc. is a global supplier of process automation systems to food and non-food industries. The company and its subsidiaries design, manufacture, sell and service process automation systems that process product streams of discrete pieces to improve safety and quality. Industries served include food processing Food processing is the set of methods and techniques used to transform raw ingredients into food for consumption by humans or animals. The food processing industry utilises these processes. and non-food and industrial applications such as tobacco, plastics, and pharmaceuticals. We believe KTEC can earn revenues of $82.6 million this fiscal year (ending Sept. 30), and $93.1 million in FY '04. If the company meets our revenue estimates, EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. could reach $0.92 and $1.15, respectively. PER believes the company can trade at 17X the $1.15/share estimate for FY 2004 (ending Sept. 30, 2004). This leads to an initial 12-18 month price target of $19.55. PER has also performed summary reports on the following small-cap companies: Capital Title Group (CTGI CTGI Capital Title Group Inc ) and Alpha Pro Tech Ltd. (APT). Summary reports are not as extensive and may not result in a full report, nor ongoing coverage of above companies. Capital Title Group provides escrow escrow Instrument, such as a deed, money, or property, that constitutes evidence of obligations between two or more parties and is held by a third party. It is delivered by the third party only upon fulfillment of some condition. and title search services, and issues title insurance policies to the real estate industry in parts of Arizona, California and Nevada. The company also earns revenue by underwriting title insurance policies through its United Title Insurance subsidiary. Our financial modeling on Capital Title Group Inc. shows that the company could earn $0.57/share for fiscal 2003. With an average industry EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become multiple of 7, we believe the shares could be valued at $8.84/share (12-18 month target price) using a discounted free cash flow to firm (DFCFF) model. Alpha Pro Tech Ltd. (APT) develops, manufactures and markets disposable protective apparel and consumer products for the cleanroom, medical, dental, pet, food service and industrial safety markets. The company operates through three major segments: apparel, mask & shield, and extended care. We believe that APT will earn revenues of more than $32 million this year. Although operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. are difficult to predict due to the large increase in revenues, we believe the company could earn nearly $4.8 million or $0.21/share. We applied both DFCFF and relative valuation methodologies to arrive at a value of $3.21/share. PER's disclosures are noted in all reports and on our Web site (www.providentresearch.com). |
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