I don't believe its fundamentals, DES is just a stock that no-one needs to own, is relatively illiquid, and is trending down.
Broker research is pretty weak (check the site, there is only 1 report including MPH and the forecasts are rubbish).
The company is quite difficult to understand (refer the debate on this site ...).
Mainly I believe that there is just a lot of stock received by MPH holders that needs to clear. MPH investors would generally not understand DES and I suspect many would have hoped to get 30-40c per DES share. They are now getting impatient and dumping.
This is always been a tricky stock. Look at the I4P debacle in Jun'06 which exposed how flimsy it is. Management seem to like acquiring with scrip and I suspect this comes eventually on to the market.
Overall I think that the stock is probably cheap. Im just working on the pro-forma NPBT of $6.1m (exclude tax benefits) and market cap of $84m puts it on an historical P/E of 13.6. I cannot see however how extravagant price targets (ie 60c to $1 or more) can be reasonably forecasted or even predicted (they can be hoped for).
Need to see some earnings growth from steady state businesses ... i.e. ones that are owned for more than 12 months. The problem is that they keep acquiring niche magazines etc ... if they earn $10m this year (I am an optimist) I am hopeful we will see 40c again ...
DES Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
