GeoInvesting has initiated a small speculative long position in Goldfield Corp. (GV) ahead of its Q4 2014 financial release. The company is engaged in electrical construction operations in the United States. Our action comes after further due diligence indicating that the company‘s core backlog picture is improving.
On March 16, 2015 we mentioned :
We think a growing backlog, a more predictable revenue stream, insider buying and favorable industry trends could bring ex-GeoBargain GV back from the grave. The financial performance of Q4 2104 will give investor clues as to how successful management has been replacing contracts that had given the company a brief period of growth during 2013. We will code GV as a GeoBargain on the radar as perform our due diligence.
Caveats Add to Hesitation for Aggressive Addition of Goldfield Corp. Shares
Our hesitation for the aggressive addition of Goldfield Corp. shares is a result of ongoing caveats.
- We have difficulty speaking with management.
- It is unclear what margins the backlog carries.
- Large projects can still lead to lumpiness in quarterly financial performance.
- Breaking out current backlog would not lead to meaningful growth in 2015, but it is reasonable to expect that the company can generate revenues in addition to the backlog throughout the year.
- GeoTeam is working on breaking down (1) various valuation scenarios and (2) core backlog growth minus a one time larger project (STEC).
Although we are still in the process of breaking down GV, our quick analysis of backlog trends indicates that the company’s core backlog minus STEC is healthy and is being replaced with new projects. We plan to provide more details shortly.
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