Last week, after having its stock price drop by approximately one third in 3 months and two thirds in 6 months, Tix Corporation (NASDAQ:TIXC) tried to stop the bleeding by presenting an earnings report that looked pretty decent for a company with its market capitalization of just over 40 million. But was anybody paying attention? The stock lingered for five days and only recently saw a modest move back upward.
The ticket company has no sell side analysts following it so let's take a close look of our own. The report on March 16, 2010 offered no guidance but gave us a picture of how they have been doing in the last couple of years. Cash flow from operating activities were 7.5 million in 2008 and 6.2 million in 2009, strong numbers but a year over year decline. The company reports on a GAAP basis and reported a net loss in both those years due to write-offs. Unlike many companies on the NASDAQ, Tix Corp has investors focusing on its GAAP numbers, which may be why there has been some disinterest in the shares. Shares were rocked late last year by a large investor who apparently had a "margin call" and had to sell millions of shares, according to the company's CEO on its recent quarterly conference call. The company ended up buying most of those shares at around $1.55.
Tix Corp's balance sheet looks strong at nearly 10 million in cash and no debt. On the company's conference call, management predicted that their ticket business would see a 25% rise in revenue and income. They also stated they believed the other business segments would be profitable. That implies that operating income of 7.2 million for the ticketing segment would rise to 9 million operating income in 2010. If we assume a modest profit for the other two segments of 1 million each, that would be 11 million operating income from the three segments. Corporate expenses have been consistent at 5.6 million for the last two years, so that guidance would yield a 5.4 million profit. The company has negligible tax expenses due to a net operating loss and sees no further write downs, so on a GAAP basis they are looking at over 5 million in profit for 2010. With a share count of just over 32 million, that produces approximately .16 earnings per share. Ignoring depreciation and ammortization costs and stock option expense would take that number to something along the lines of .25-.30 per share.
This company would do better providing adjusted non-GAAP figures for its shareholders. Indeed, the executives would do better for themselves considering they own around half of the company's shares (institutions hold less than 5%).
With these predictions and the company willing to buy its own shares back this stock should double and maybe even triple from here as long as they execute. As recently as October 2009, the stock was trading at over $4 and would represent a multiple of 15 times .25 adjusted earnings. In a healthy market, these numbers will not be overlooked for too long.
Disclosure: Author holds shares of TIXC
