Xerium Technologies, Inc. (NYSE:XRM)
A manufacturer and supplier of two types of consumable products used primarily in the production of paper - clothing and roll covers.
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High Volume breakout on 02/19/13
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low PEG, strong price uptrend
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bankruptchy - third point sky top
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A totally under the radar company that completed a pre-packaged bankruptcy effective 5/25/10. Existing shareholders were diluted but not wiped out, retaining 17.4% of the company with warrants to buy another 10%. Lenders exchanged $150M in debt for 82.6% of the company (pre-warrant dilution). Top notch management team and limited aftermarket product set for tight focus. #1 or #2 in most of their markets from both products and a well established support network. The industry they support (papermaking) might be perceived as a disadvantage but also presents an opportunity to gain market share from OEMs and competing aftermarket suppliers.
The company is also expanding into other industries where their textile and roll cover expertise is useful. Revenues have been growing sequentially over the last several quarters despite the challenges of the balance sheet restructuring. Q2 earnings will be impacted by bankruptcy costs but the value should be evident. Extremely small number of shares available and very large short interest. Heavy institutional holdings in the past will probably be reestablished. The stock regained inclusion in the Russell 3000 at reconstitution but only made the Microcap index due to the limit available shares. They also regained full compliance with the NYSE listing standards after 18 months of provisional listing.
Finally, all financial sites have the share count "wrong" (including the NYSE) since they are based on Q1 reporting and have changed with the restructuring. All in all, a great setup for a huge upside surprise.
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This is only hindging on the government's bail out of the financal industry. We should see at least a short term gain on all stocks.
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way overvalued imo
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liquidity problems, high debts, increasing costs, tight margins, extremely competitive industry..what is there to like?
Any misstep will send this stock low, very low.
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low cost small cap
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Dillon says BUY
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I'm just here for the dividends.
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I like the below $10 price and its potential for a good return.
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This company has good fundamentals and positive growth. I like that they are investing in China and in Europe. That should innoculate them somewhat from the downturn in the American economy. The only real problem with this stock is the dividend: I think it's scaring investors off. It doesn't matter whether XRM has the cash reserves to pay out the dividend or not, investors are spooked by a penny stock with a healthy dividend. I'm willing to take the risk.
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Xerium has a low PEG below 1, a forcasted 14% growth rate for the next 5 years and a big dividend. I look at the dividend a little skeptically since it is a huge percentage of their profits, but they are making enough to cover it. What takes me over the top on this company is that the CFO just bought 25,000 shares at market prices. If anyone knows the true health of Xerium, the CFO does and he obviously thinks it is worth investing his money. I still look cross-eyed at the dividend, but his buy combined with the other factors I have mentioned makes me believe this company is worth the risk.
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High Dividend, Low PEG, Hi ROE
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