KSW Looks Undervalued
While running some new value screens recently, I came across KSW, Inc. (KSW), a company that furnishes and installs heating, ventilation, and air conditioning (HVAC) systems and process piping systems for institutional, industrial, commercial, residential, and public works projects. The company is based in Long Island, NY, and its revenue is concentrated in New York City. Given the economic downturn, revenue and earnings have fallen precipitously, and the outlook for residential and commercial projects looks bleak. That is the bad news.
The good news is that KSW’s balance sheet, flexible cost structure, and strong backlog suggest the company is resilient enough to withstand the near-term challenges and could potentially surprise to the upside this year. As of 12/31/09, net cash totaled $14.75 million, which equals approximately 65% of market cap. In addition, the company is profitable, earning $0.20 in a cyclically depressed year (revenue declined 31% in FY 09). Further, it managed to almost double backlog (from $62.5 million to $121.5 million), suggesting the company is continuing to provide value-add to its customers.
Investing, Long Term Investment, stock market | admin March 25, 2010
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