Businessweek Archives

Kent's Buy May Come Aboard Fast


Inside Wall Street

KENT'S BUY MAY COME ABOARD FAST

A company selling electronic connectors and cable is hardly expected to be a live wire. But on the Street, dullness often turns into excitement on an earnings surprise. That prospect has started some recent buying in the shares of Kent Electronics. The stock has edged up from 14 in the summer to 17 3/4. And some pros are betting that the stock could well jump to the mid-20s if their call on Kent's earnings proves accurate. Here's the scoop:

Kent Chairman and CEO Morrie Abramson has been busy acquiring other smaller electronics suppliers. One that Abramson has recently agreed to acquire is Shelley-Ragon, a distributor of electronic connectors in 15 states, with revenues of nearly $50 million.

That's no secret. But Abramson is keeping silent on when he will complete the purchase and just how much the acquisition will add to the bottom line. Most analysts think that the buy won't be completed until mid-1992 and that it will add only 5~ a share to earnings in the next fiscal year, ending Mar. 31, 1993. So they estimate that Kent will earn $1.05 in the year ending Mar. 31, 1992, and $1.20 in fiscal 1993.

Wrong, say some other pros. They think that Abramson will finish the deal this year and that fiscal 1993 earnings will jump to $1.40 a share, as Shelley-Ragon adds some 40~ a share to the bottom line. In fiscal 1994, net is expected to rise to $1.60. But with $27 million cash on hand and no debt, Kent is out to acquire, and 1994 could see even bigger earnings. So this contingent thinks Kent is worth at least 25.GENE G. MARCIAL


The Good Business Issue
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus