Friday, July 10, 2015

Ceres: Friday Afternoon Bargain?

In the post “Ceres Punts After Oil Price Drop” published earlier this month I noted that agriculture technology developer Ceres (CERE:  Nasdaq) has shifted its business focus to the food and feed markets.  The company expects to save between $6 million and $8 million per year through a restructuring effort. that leaves biofuel markets running a distance second.  I posed the question of whether the shift in priorities can change the value of Ceres.  Investors will have a chance to hear about progress on the plan when the company reports financial results for its third fiscal quarter ending May 2015.

The timing of the report is a bit unusual  -  Friday July 10th after the market close.  Public companies typically report during the week when analysts and professional investors are still in their offices.  On most Friday afternoons in June, most investors are on the way to the lake house or at least heading to some relaxing diversion near home.  Does the company have something negative to report that would be easier to reveal when fewer eyes and ears are around?

There are no published sales and earnings estimates for Ceres, at least none that are current.  Even if the company had a regular following of analysts and portfolio managers, it is quite possible they might not be able to anticipate quarter results with great accuracy.  Based on management’s announcements in recent months, it seems Ceres is navigating a particularly fluid environment that means a shift in sales, costs and expenses.

The best course for investors is to take some time on Friday afternoon to listen to the Ceres earnings conference call.  Management is likely to provide an update on its strategic plans.  The stock has been in a slump for the last month and has reached oversold territory.  If there is progress on finding new customers in the feed and seed market as well as progress in realizing cost savings, it seems CERE could be a good buy at the current price level. 

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.


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