Graftech: On Graphite Coattails
Graftech makes graphite
products like this crucible for
traditional industries, and
is expanding its products for
alternative energy industries.
Photo by Vladnov
Graftech has struggled some in recent months to keep momentum going at this top-line, but long-term the company has experienced strong growth. The addition of new customers in the alternative energy industry has been a part of that growth. In the most recently reported twelve months Graftech recorded $1.3 million in total sales and delivered $66.9 million in net profits. Operating cash flow was $144.5 million.
GTI is trading at 17.4 times trailing earnings, which is just under the average price/earnings ratio of its industrial peer group. There is a 30% differential between the trailing and forward price/earnings ratios, suggesting an impressive appreciation potential. A beta of 1.40 means relatively low volatility for the holder waiting for a price increase.
Of course, the half dozen analysts who have published earnings estimates for Graftech could be all wrong in their predictions of future earnings. That would cast doubt on the anticipated ramp up in stock price. One thing for certain is that graphite has a compelling future in the alternative energy sector and it seems reasonable Graftech will be a beneficiary.
Debra Fiakas is the Managing Director of Crystal Equity Research, an alternative research resource on small capitalization companies in selected industries.
Neither the author of the Small Cap
Strategist web log,
Crystal Equity Research nor its affiliates have a beneficial
interest in the companies mentioned herein.