As you may know, I first purchased DGX at the highs and was buying them as they continued to fall. I finally took the step of swallowing my pride and selling out of them once they announced the RIO deal.
DGX has had contract win after contract win yet they have been losing money. Yes, it is because of the GFC and write downs but I also think it is due to some fault of the management. I'm not saying that I could do better, far from it, I just I think that if you are in those roles, you need to be flexible and be just as prepared for the downturns as well as the upturns.
Anyway, where do they sit now?
They have promised to become profitable this financial year, yet it seems as though that result will be pushed back further... Can they afford to continue operating that way???
From last account, their NTA is 1.8 cents per share, compared to a SP of around 4 cents. This means they are currently worth $2.7 million but their market cap is $6 million (it was $50 million before the impact of the GFC was felt).
As at 30 June, 2012, they had a net working capital deficiency of $24.1 million and a net cash flow of $21.2 million. They have stated since then that the coming months will remain challenging as they deal with the final wrap up of projects coming to an end. They have also restated that they should return to profitability by the end of 2013.
Would I buy now?
Probably not. I would like to see the start of an improvement before I dabble again. There are plenty of shares out there that do make profits and give good returns. But of course, that is only my view and you need to do your own research and seek professional advice if needed.
Good luck and perhaps the next quarter's results might change my sentiment.
DGX Price at posting:
3.2¢ Sentiment: None Disclosure: Not Held
