Electro Scientific Industries, Inc. (NASDAQ:ESIO)

crazykling says it all

buying back tons of stock and undervalued

After mulling over the Paydirt issue that brought my attention to Electro Scientific for a month now, I am hopeful this will play out. I'm getting aboard at $19.25

turnround

The Company and its subsidiaries provide high-technology manufacturing systems to the global electronics market, including advanced laser-based systems that are used to microengineer electronic device features in high-volume production environments

ESIO
PD Pick with what seems to me lots of potential. P/B 1.35, P/E 20, F P/E 17. 52 week high was around 25, it's now trading at 19, has not traded lower than 18 last 52 weeks.

This one guy, Niernberg, bought into it to the tune of 11%. I'm reading up on him and he sounds like a strong value small cap fund manager. It's a 5 Star stock pick on CAPS too, always very nice. So to recap, relatively low P/B, not terribly low P/E (But low if you back out cash), much closer to 52 week low than high, major officer purchase buy Niernberg (and one other guy from PD article - can't give it all away), so... we are meeting all 5 major aspects of "What has worked in Inesting"

As for the business, I don't know a whole lot about this industry, but it seems like it's a pretty considerable player with room to grow, maybe room to shrink too, but more upside than downside.

Maybe not a stock to own forever, but seems like a good one for the next 6MO-2yrs.

This one caught my eye when recommended by paydirt -- nothing to add to what's already been said except that they are located in a hotbed of innovation. I'm going to follow all these smart people on CAPS and buy today for the All-American discount price of 19.95(or less)!

In with real money at 19.67. Following the smart money here- read 11.6% shareholder Nierenberg's comments here: http://biz.yahoo.com/seekingalpha/070125/25116_id.html?.v=1

This will be a bumpy ride, but has excellent long term prospects.

undervalued company with two major shareholders controlling over a third of the company that will have major power to exert positive influence.

Price = $20.75. Value = $35 assuming company uses part of it's $210mil cash hoard to recapitalize by buying back a large portion of it's stock.

No LT debt, Mkt Cap = $570mil, Cash = $215mil, Equity = $402mil

1) Nice amount of cash and assests. It looks like they are somewhat conservative with the cash though - could be good or bad...

2) No debt.

3) *** So far, many Caps players have said this is an unprofitable / cyclic industry. However, ESI operates a NICHE WITHIN the industry, and will have certain advatages during cyclicality, since its customers will want efficiency during the good times, and especially during the bad (to compete in price). As for its customers' capex's, this company offers the types of products that shouldn't be dicounted from capex until 'the last resort' during tough times.

4) I don't think the value is incredible, but I don't want to overlook the sway and influence of the 2 value investors on board. Note again these are VALUE investors on board. Recent (3-4 years) exec turnover suggests that change is not a reluctant thing for this player.

5) Being a market leader, it has cost advantages (both operational, and in production as well as negotiation), since it could benefit from its lower costs margins. It's in a margin-improvement business !!!

New products coming online

Picking up new business

net cash ~ $7/ share; trading at 14.4x calendar 2007 eps i.e. stock is cheap relative to expected earnings growth over next two years of about 15-16% (some good value investors own it: Third Avenue owns 14%; Nierenberg Investments owns 11.6%; and Dimensional Fund Advisors owns another 7.8%).

push to smaller and smaller geometries in electronics industries like semis increases demand for company's laser systems.

David Nierenberg's invested in this one, and he's a small-cap master... I haven't done any research other than noticing he's been buying shares.

If nothing more this will track a Nirenberg pick.

$8/share in cash. See activist shareholder pushing for large 1-time dividend.

Lots of cash