Keep on
Truckin' PST Vans, Inc. (NASDAQ PSTV) Current Price $7.00
We initially recommended PSTV via our 900# on June 27, 1995 @
$6.50/share.
The company is a truckload carrier focused on serving
three markets in the United States: transcontinental, intra-west and
Midwest-southeast. PSTV was brought public by Alex, Brown & Son and
Wertheim Schroder & Co. during March of 1995 at $15.00/share. The IPO
was for 2.1 million shares, which after the offering 4.2 million shares
were outstanding. PST
Van crashed through numerous stop signs on its way to $6 3/8 due on
earnings estimate reduction for fiscal 95. Due to excess rain in
California as well as in the intermountain states during the spring,
fruits and vegetables did not grow that well, so anticipated revenue and
earnings did not materialize. On or about June 20, earnings estimates
were lowered to $.95 for fiscal 95 and $1.37 for fiscal 96. Since PSTV had very little exposure in the public market place and when
the syndicate group that owned PSTV decided to unload their shares at a
rate faster than a radar gun looking for speeders, the stock deflated.
We at S. A. Advisory
hate new issues, but love them, especially when they become distressed
and their emergency blinkers start vibrating. During fiscal 94 PSTV had revenues of $136 mil and earnings/share of
$1.66. We anticipate that during fiscal 95 revenues should exceed $130
mil and earnings/share should equal .95. During fiscal 96 revenues
should rebound to $172 mil and earnings/share should equal $1.37. Based
upon these assumptions, in addition to other fundamental variables being
considered, shares of PSTV should be accumulated. As of March 31, 1995,
the stated book value was $6.47 net, tangible book value was $4.41. At
present share price of $7.00, it is easy to see that PSTV trades at
slightly above stated book and about 50% above tangible book. A
relatively undervalued situation when compared to its peers. (Note:
first quarter typically weakest while third and fourth strongest. We
assume that second and third will be lower than normal due to weather
scenario). The PSR
value also indicates extreme undervaluation. Based upon fiscal 94 and
fiscal 95E (used $7.00/share value) our PSR value for 94 and 95,
respectively, comes in at .21 and .22. When examining PE, once again
PSTV looks extremely attractive. If we assume a share price of $7.00 and
develop a PE value for estimated fiscal 95 and fiscal 96, respectively,
using our values of $.95 and $1.37, a very low PE value surfaces, that
is 7.3x and 5.1x. When
you consider that PSTV has an experienced management team, sophisticated
operating systems, efficient network of four terminals, modern
standardized fleet and fundamentally undervalued based upon P/B, PE and
PSR, one would have to wonder why this stock isn't at least $10.00. The
simple answer is that very few brokerage firms follow the stock and the
ones that do follow it have sold it. They had a buy recommendation on it
at $15.00 which was somewhat pricy and now that it is cheap at $7.00,
they have a hold on it, when it should be a BUY.
S. A. Advisory has hopped on PSTV for the ride and expects to profit quite handsomely. We will monitor it in our 900# portfolio for a percentage gain performance. Broker contact: Greg Nelson at 1-800-453-9408. Corporate: 1-801-975-2500.
Select Financial Data - December 31 Year End First Quarter 1994A 1995E 1996E 1995E 19964 Revenue 136 mil 130 mil 172 mil 36 mil 31 mil Net Income 1.66 .94 1.37 .12 .05