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This Month's Tiny Gems - November 2009Metropolitan Health Networks, Inc. (AMEX: MDF)
Seahawk Drilling, Inc. (NASDAQ: HAWK)
Nicholas Financial, Inc. (NASDAQ: NICK)
Metropolitan Health Networks, Inc. (AMEX: MDF)
Metropolitan Health Networks, Inc. (AMEX: MDF) provides comprehensive health care services to people with Medicare in Florida. The company currently cares for approximately 33,000 customers in 18 counties in South and Central Florida. Metropolitan Health’s team of physicians, professionals, and associates are committed to serving customers with the highest standards of medical treatment and personal service. The company aims to always exceed expectations.
For decades, Florida has been a highly attractive and rapidly growing market. In 2005, the state’s population of those 65 and older was 3.0 million and forecasted to increase to 3.4 million by 2010 and to 4.7 million by 2020. Florida is also the second largest Medicare population in the U.S. with an estimated 3.2 million eligible beneficiaries. In addition to rising demand, the company intends to continue growing by investing in the development of healthcare provider networks in other counties.
In an effort to increase efficiency, the company recently announced its initiative to implement a unified electronic medical records and practice management solution for nine of its medicine offices. The solution will allow physicians secured access to paperless patient information anytime, anywhere. Users will be able to easily access and review complete patient histories, including past visits, current medications, allergies, labs, and charts.
Over the past five years, sales have increased at an average rate of 17.13% while net income has grown at an average of 11.81%. As of last report, the company held $3.75 million in cash and cash equivalents, and $38 million in other assets. Current liabilities were reported at $4.14 million. Metropolitan Health boasts a respectable 26.3% Return on Assets (ROA) and 32.1% Return on Equity (ROE).
Seahawk Drilling, Inc. (NASDAQ: HAWK)
Seahawk Drilling, Inc. (NASDAQ: HAWK) is focused on providing contract drilling services to the oil and natural gas exploration and production industry in the Gulf of Mexico. Operating the second largest fleet of jackups in the Gulf of Mexico, the company’s customers include independent oil and natural gas producers, drilling service providers and Petróleos Mexicanos (PEMEX), the state-owned petroleum company of Mexico. Competition ranges from large, international drilling companies to smaller companies who focus solely on the Gulf of Mexico shelf.
Seahawk’s strategy as an independent company is to improve the profitability, efficiency and reputation of its core business: providing jackup drilling services to the exploration and production industry in the Gulf of Mexico. Leveraging its strengths, which includes the large jackup fleet, existing relationships with customers and its experienced management team, the company strives to more effectively focus on operations and potential for growth; delivering greater value for stockholders.
Although earnings have been affected by the current economy and lower commodity prices, the company remains steadfast and is optimistic for the future. Randall D. Stilley, President and CEO of Seahawk, commented, "With natural gas prices at record lows, the Company faces a challenging market in the near term. However, in the midst of hurricane season and weak natural gas prices, we have seen a modest improvement in inquiries and bidding in the U.S. recently, as some of our customers are taking advantage of lower well costs, and the general sentiment towards future gas prices has improved."
Currently, 29.72% of the shares outstanding are held by insiders and 4.60% are held by institutions. Two analysts believe the company is a “Hold”, while one believes it’s a “Strong Buy”. As of last report, Seahawk had $18.1 million in cash and cash equivalents with $94.3 million in current liabilities. Generating $409.4 Million in annual sales, the company trades at a market cap of $314.4 million.
Nicholas Financial, Inc. (NASDAQ: NICK)
Nicholas Financial, Inc. (NASDAQ: NICK) provides direct consumer loans and purchases installment sales contracts from automobile dealers for used cars and light trucks. Nicholas Financial operates a network of forty-nine branch offices in Florida, Georgia, Indiana, Ohio, Kentucky, North Carolina, South Carolina, Michigan, Maryland, Virginia, Alabama and Tennessee. Its software subsidiary, Nicholas Data Services, Inc., designs, develops, supports and sells accounting software to small businesses throughout North America and is the computer automation provider for Nicholas Financial.
Nicholas Financial enables individuals with blemished credit to purchase a vehicle. Vehicles have long held a special place in the hearts of Americans. An American’s car is a symbol of freedom and hope for a future. From the time a teenager receives his learners permit, vehicle ownership gives the freedom to go just about anywhere. A vast majority of Americans will sacrifice a great deal to keep this freedom at all costs. It is this attachment that causes the company to believe that both the subprime borrower and secondary automobile markets will continue to expand.
Over the past year, Nicholas Financial has worked to modernize and strengthen its corporate infrastructure. Their IT staff has upgraded and expanded the company’s computing facilities, which should provide ample processing and data storage capacities for future growth. Going forward, the company will continue to implement efficiencies that will help lower costs and amplify earnings growth once an economic rebound occurs. In addition, Nicholas Financial intends to increase its revenues by adding new branches in the years to come.
As of last report, the company had $204 million in total assets and $116 million in total liabilities. During the second quarter, revenues increased from $13.1 million to $13.7 million year-over-year, while net income increased from $1.6 million to $2.3 million. Trading at a P/E ratio of 13 and Price/Book Value of 0.81, the company is undervalued compared to industry averages.