Inside Wall Street
THIS GRASS LOOKS GREENER
The recent severe snowstorms in the Northeast have dampened the stock of Barefoot Inc., a major lawn-care company. Barefoot shares have slumped on NASDAQ to 29 from 34 on Jan. 3. But several analysts are still holding fast to a sunny forecast.
"The stock's recent weakness doesn't appear to reflect any fundamental weakness in the company's operations," Kidder Peabody analyst Todd Berko assured clients. "We continue to expect third-quarter earnings of 26 vs. 16 a year ago, and our estimate remains $1.37 for the year ending Mar. 30, 1994, and $1.80 for fiscal 1995," adds Berko. The 1995 figure could prove low, he explained, because raw-material costs have been falling. His price target for the next 12 months: 43.
This fast-growing company with $50 million in sales has a "strong earnings momentum going for it," says one New York hedge fund manager who bought into Barefoot recently. This pro also likes the company's "solid balance sheet, with its cash exceeding the company's debt" despite recent acquisitions. Selling at 17 times estimated calendar 1994 earnings, Barefoot is way undervalued, he insists. "If it reflected the company's 30% earnings growth rate, the stock would jump to 54 a share," says this pro.GENE G. MARCIAL