Closed out our Summer Infant (NASDAQ:SUMR) position. The stock exceeded our price target of $3.75 mentioned in our 5/16/2014 email.

In our 5/16/2014 email we mentioned:

Although the company has grew revenues at a respectable clip from 2007 to 2102, net income growth has been unexciting. Net income turned negative in 2012 and 2013.  Reasons for tracking:

  • In 2014 the company is anticipating a return to profitability and once again growing revenues. In fact the company returned to profitability in Q1 2014 after two consecutive quarterly losses.
  • Although sales and EPS were down for the quarter, the company expects the bottom line to improve on a sequential and year over year basis throughout 2014 with sales growth occurring in the second half of 2014.
  • Thus we expect analyst 2014 EPS estimates of $0.06 to be overly conservative. According to management guidance 2014 EPS should minimally reach $0.25.; applying a FPE multiple of 15 on analyst estimates gives us a short term price target of $3.75.

Caveats:

  • The company has history of over promising and over delivering in the past.

In our 6/11/2014 email we coded SUMR as a GeoBargain on the radar at $2.93