This morning we issued the following tweet to GeoInvesting premium members:

Adding to our IEH Corp (OOTC:IEHC) long position on hint of strong Q in NT-10 Q filing (quarterly extension notice). Very thinly traded, so will likely be small add. #GeoCallToAction

IEHC On Our Radar Since 2013

We have been tracking IEHC since November 19, 2013 after the company reported strong Q2 financial results.  Here is our original research note.   We stated:

“This marks the third consecutive quarter of strong growth after several periods of inconsistent    financial results.  We will establish a small preliminary position in IEHC as we begin our DD.”

Yesterday after hours the company filed a NT 10-Q filing in which the company provided preliminary Q1 2016 results:

  • Q1 2016 sales projected to be $5.0 to $5.2 million compared with $3.9 million in the prior year period
  • Q1 2016 EPS are projected to be $0.30 to $0.33 compared to $0.17 in the prior year

Meager Valuation

The stock now trades at some meager valuation multiples:

  • EV/S = 0.92
  • P/E = 7.88

IEH Corp designs, develops and manufactures printed circuit connectors for high performance applications.  The company services are in the Government, Military, Aerospace, Medical, Automotive, Industrial, Test Equipment and Commercial Electronics markets.

Overall, IEHC  has experienced  impressive growth in sales and EPS since 2004.  Below is a snapshot of the financial performance for the last 12 years.

IEHC 15to13.png

IEHC 12to10.png

IEHC 09to07.png

IEHC 06to04.png

Our Final Take on IEH Corp: Cautiously Optimistic and Will Contact Management

The fiscal Q1 2016 revenue and EPS showing is easily a record for the company and marks its third consecutive quarterly strong financial performance. However, the fact that the company operates in a cyclical industry and that 50% of its revenues are generated from U.S. military contracts can lead to periodic disruptions in quarterly growth comparisons as evidenced by the above table.  Still, we think at the juncture, especially after considering IEHC valuation that we have enough reason to request an interview with management to determine if drivers exist that will lead to continued growth in the near to mid-term.