What I'm looking for in the earnings report, specifically with this quarter:
Guidance on revenues for the second half of the year, including new customer programs and expansion with the main customers.
What I always keep an eye on:
The level of CMT sales compared to total revenues for each of their main customers, and the level of sales for other customers. These can move around with a significant amount of noise, but generally speaking, their sales to NAVISTAR may have declined somewhat over the long term, but have held up well in recent years. They seem to have a strengthening position with PACCAR, who is the stronger of the two customers. And, their other revenues took a large hit in the recession, but have been building well, and appear to be poised to continue increasing.
They remained profitable in 2008, even after revenues were cut in half, which says something about either the business model or the quality of management. Cutting the other way is their dependence on a few large customers.
All in all, I could see them hitting $200 million in revenues and $2 EPS in the next year or two, with some multiple expansion within their norms to a PE of 10, gives us a target around $20. Unusual gains with new customers could provide extra gains from both earnings and multiple expansion from there.
It's a nice place to park some capital, but it's not a position with shocking upside.