XDM-v: Xentel - bottom fishing opportunity?

[tara]

The company has now filed its share buyback transaction total, which is significant and will increase EPS going forward


Xentel DM Incorporated (XDM) As of March 11th, 2009

Mar 11/09 Mar 01/09 Xentel DM Incorporated Direct Ownership Common Shares Class A 38 - Redemption, retraction, cancellation, repurchase 186,500 $0.100
Feb 24/09 Feb 24/09 Xentel DM Incorporated Direct Ownership Common Shares Class A 38 - Redemption, retraction, cancellation, repurchase 1,123,000


Thus far, the EPS scenario is as follow:
• EPS Q1 = +.01$/share
• EPS Q2 = +.01$/share
• EPS Q3 = +.02$/share
• 2008 9 months cumulative EPS = +.04$/share


It is comforting to know there is sufficient amount of public information, readily available, to understand just how much business Xentel has done in oct/nov/dec, and going forward into 2009. One just has to click on the following calendar and see how many events were held, and how many are planned.

http://www.xentelevents.com/xentools/xentelevents/www.xentools.com/xennet420dev/Events/siteCalendar/calendar.html


Safe to say the company remains busy in the market turmoil

[tara]

Xentel (XDM.v) 2008 results


• revenues were 96M$
• profitable, net earnings +1.5M$ or +.06$/share
• currently trading at 1.5x EPS
• gross margin 24%, up from 20% last year
• the company will pay .02$/share dividend (shareholder as as of may 14th 2009, payable may 29th 2009), for a whopping 22.2% return on today's share price of .09$/share
• share buyback in force, insiders have been buying as well


Please tell me where you can find in the financial crisis, a penny stock on the venture exchange trading at an EPS ratio of 1.5x... that will pay 22% dividend on top of it?

[Deepglue]

I got into this one a while back. It was worth the wait!!

Good work on posting this early!

Only one things bothers me. The demographics of their customer base!
I do not see anything in the calender that targets the 15 to 25 year age group! No wake boarding no extreme sports..
lots of classic stuff for forty plus.
ALLSTARS BASEBALL BENEFIT, SHRINE CIRCUS, CELEBRITY SLOW PITCH CHALLENGE
The younger group that will blow the whole pay check on a good weekend in the summer...
are not part of the customer base. Wasting money is an art with some young people!
if they make it.. they spend it!!! not into Xentel hands ...

[tara]

Xentel Inc. (XDM.V)
Investor Relations:
Caren Holtby, Email: carenh@xentel.com, Tel: 866-204-9861


Xentel just declared another marvelous quarter in relation to its current trading price. 573k of net profits(+.022$/share EPS) bodes well for 2009 dividend possibilities. This is one of the rare penny stock which "pays will you wait". Michael Platz is delivering on his word. Shareholders just received +.02$/share dividend on may 29th and based on follow up performance, it seems we are in for a repeat in 2009, as the company declared a 2 cents dividend on 1.5M$ profits in 2008.

Now remember the float is shrinking with the share buyback; profit wise, they already raked in more than a third of 2008 profits with Q1 2009, so it's possible the dividend can be raised in 2009.


Q1 summary

• trading way below book value of 0.43$/share
• positive working capital per share of 0.144$/share
• roughly 24M$ of revenues this quarter, over 450 clients , and thousands of employees in over 30 offices across North America
• positive cash flow from operations and virtually no long term debt
• positive net earning in Q1 of +.022$/share
• Insiders own roughly 60% of the float
• nation wide Shriner tour recently announced, which confirms support for Xentel services
• calender of events looks full, see the link attached:
http://www.xentelevents.com/xentools/xe ... &year=2009
• as Q4 and Q1 have been announced, the blackout period will be lifted, insider and buyback program(NCIB) can resume


but of course, liquidity is a problem...

[tara]

Xentel DM Incorporated (XDM): 2009 Q2 summary

• 2009 EPS Q1 = +.02$/share
• 2009 EPS Q2 = +.03$/share (+681k, this is the 5th positive quarter in a row)
• and prior performance, 2008 EPS = +.06$/share


Other metrics of interest
• Book value = 0.41$/share (10.3M$ - goodwill and intangible only 1.2M$)
• Working capital/share = 0.16$/share (3.9M$)
• 6 months revenue exceed 47M$, with impressive backlog
• Free cash flow positive


The company remains debt free, and when you remove the working capital per share of 0.16$/share, the company currently trades at less than 1x the 6 months EPS. With such an impressive performance, onlookers can expect insider buying to resume, share buyback to be renewed and an enticing dividend to be declared in 2009 (.05$/share dividend seems very realistic at this point).

A special bonus is always luring for shareholders, as the failed privatization attempt generated a 50M$ lawsuit by Xentel against the acquirer. Any recuperated amount could lead to a substantial one time dividend payment.

It is comforting to know there is sufficient amount of public information, readily available, to understand just how much business Xentel has done recently and hom much backlog they have going forward into the second half. One just has to click on the following calendar and see how many events were held, and how many are planned.

http://www.xentelevents.com/xentools/xentelevents/www.xentools.com/xennet420dev/Events/siteCalendar/calendar.html


Of course, once again, the above is simply my personal understanding and not to be construed as investment advice. I’m not a broker, promoter, director, manager or employee of the aforementioned company, just a shareholder. Some typos could of occurred, do your own due diligence.

[tara]

Positive from all angles, Xentel exhibits the following metrics scenario:

2009 Q2 EPS = +.03$/share
2009 Q1 EPS = +.02$/share
2008 Q4 EPS = -.00$/share
2008 Q3 EPS = +.03$/share

• The Trailing Twelve Month (TTM) EPS = +.08$/share, for an EPS ratio of 2.4x at the current price of .195$
• The forward looking Twelve months based on the 2009 Q2/Q1 is +.10$/share, for an EPS ratio of less than 2x at the current price of .195$


2008 has given way to a normal course issuer bid of 1.3M shares announced oct 7 2008.
2008 has also rewarded insiders and common shareholders via a .02$/share dividend payed on may 29th 2009, due to earning 1.5M$ in 2008. One should note that in the first half of 2009, the company has already earned 1.25M$, clearly on its way to beating 2008 performance, thus paving way for another round of share buyback and dividend payout.

The float is very closely held by insiders and friends. However, insider activity has been around during the summer and over 100 000 shares exchanged hands yesterday, which will be closely monitored for insider activity prior to the annual buyback renewal period of October 2009.


Xentel DM Incorporated (XDM) As of September 16th, 2009

Sep 15/09 Sep 11/09 McAleer, Francis Thomas Direct Ownership Common Shares Class A 10 - Acquisition in the public market 1,000 $0.165
Jun 23/09 Jun 22/09 McAleer, Francis Thomas Indirect Ownership Common Shares Class A 10 - Acquisition in the public market 40,000 $0.215
Jun 23/09 Jun 19/09 McAleer, Francis Thomas Indirect Ownership Common Shares Class A 10 - Acquisition in the public market 1,000 $0.215
Jun 23/09 Jul 22/04 McAleer, Francis Thomas Indirect Ownership Common Shares Class A 00 - Opening Balance-Initial SEDI Report
Mar 11/09 Mar 01/09 Xentel DM Incorporated Direct Ownership Common Shares Class A 38 - Redemption, retraction, cancellation, repurchase 186,500 $0.100
Feb 24/09 Feb 24/09 Xentel DM Incorporated Direct Ownership Common Shares Class A 38 - Redemption, retraction, cancellation, repurchase 1,123,000


Xentel has over 400 clients and 1,900 employees in over 25 offices across North America. A few weeks ago, I witnessed first hand the popularity of their Shriners Circus as their regional event was next to my house…and let me tell you, it was jammed pack.


Here is an historical breakdown of the trading prices and volume since inception:





The backlog is easily determined by the calendar of events given below:

http://www.xentelevents.com/xentools/xentelevents/www.xentools.com/xennet420dev/Events/siteCalendar/calendar.html



P.S. The above is simply my personal understanding and not to be construed as investment advice. I’m not a broker, promoter, director, manager or employee of the aforementioned company, just a shareholder. Do your own due diligence. Typos could of occurred.

[Alan]

Given the 5 cents in earnings for the first 6 months and the annualized PE ratio of around 2X. This stock seems like a screaming bargain. I've spoken to management and they may be promoters but they are not "stock promoters" and there is currently nothing being done to get their story out to the general public. This creates a fantastic opportunity to buy at a discount but once you've bought in, it's also extremely frustrating watching a stock hover in your portfolio that should be trading 2-3 times higher.

I have no doubt that at some point an investment newsletter will recommend the stock and we'll see a great run but until that time it's a hurry up and wait scenario.

If this company hired a professional IR firm like QIS (the owner of this site and with a focus on fundamental value) they would likely trade at closer to their real value which is closer to 6-8X annualized earnings or 60-80 cents per share. The only thing the company is really missing is exposure to the investment community.

This company falls into a very small category of microcap companies that are profitable and don't need money from their shareholders. One of the main reasons for having a strong share price is for raising capital and to use your shares as capital in a takeover. XDM doesn't look like they need a higher price either of these reasons.

The one positive note that seems to indicate that the company will eventually try to draw some attention to their company is the recent dividend. Why would a penny stock pay out a 2 cent dividend? Insiders pick up a few dollars from their large holdings but this isn't a stock that is likely to find it's way into a lot of retirement portfolios that need retirement income. I'd have to say the company IS actually looking to create a following and good way of doing it is to pay a dividend which rewards shareholders and at the same time attracts some attention by the public. They succeeded in this as we are now trading at 5-8 cents above where the stock was trading before the dividend.

If management wants to add to shareholder value they will institute a regular dividend every quarter or semi-annually. This will help the company stand out and at the same time reward shareholders. A semi-annual dividend of 2 cents per share would be less than half of their earnings and it would likely build a solid base for the company share price at around 35-40 cents per share.

I was a bit concerned that management might decide that the $500,000 in various expenses to be a public company is too high and they should just buy out the company and take it private (similar to the transaction proposed a few years ago). I discounted this risk since the company wouldn't likely pay out a dividend and increase shareholder value if they planned on taking the company private unless it was to a non-arms length party. In that case manangement would be trying to get the highest price possible for the shares which woul be somewhat higher than current prices.

That's my 2 cents worth (for what it's worth). Nice pick Tara.

Alan