Engineering, Inc. (TNGI) Current Price $.50
On July 27 our Super Fast Phone Investors were notified to purchase 10K shares of TNGI at the .375 - .40 level. This is a speculation (Investors that are risk oriented should only consider purchase of these shares).
The company's operations now consist of manufacturing through its Dynatenny Inc. subsidiary (d/b/a "DynaVac") diversified vacuum systems for space simulation, optic coating and plasma treatment for medical labware and servicing, refurbishing, upgrading and installing environmental equipment and earning license and technology fees and rental income.
At this point in time, TNGI in our opinion has turned the corner and is on the road to continued profitability. During the past few years TNGI has downsized and restructured and appears focused on its core business. TNGI is primarily a high-tech environmental air pollution control company. During the early 80's TNGI traded as high as $7.00 on the AMEX - the company was eventually de-listed and trades now on the NASDAQ BB.
Please keep in mind these values are from continuing operations only and does not include extraordinary gain or losses nor does it include interest expenses. If we take everything in account, TNGI had a .10 gain for the first quarter versus a loss of (.08) during 1994 first quarter. At present there are only 3,685,000 shares outstanding with management controlling 19%. There are at least 1,100 shareholders. TNGI has at least 4.2 million operating loss carry forward (they won't be paying taxes for quite some time). The company has about a $2 million backlog at present, which is normal for this time of year. The company has a negative book value, but according to management, this will be erased by the end of the third quarter.
If we take a look at the fundamentals, TNGI begins to look very attractive. Based upon PSR (price to sale), a very undervalued situation develops. If we use the .40 recommended price and the estimated revenue for fiscal 95, a PSR value of .18 is calculated, meaning that it is only trading at 18% of revenue. Remember, a value of one is considered cheap and undervalued. If we were to value TNGI at 50% of sales, our stock would be worth $1.00. Based upon price to sales, this stock is cheap.
If we look at earnings and PE, management anticipates profit of around $.08 for fiscal 95 -- based upon our recommended price of $.40, TNGI is only trading at 5x fiscal 95 earnings estimates. Management believes a 10% growth rate is attainable. If we assume this and value TNGI at its growth rate, a 10 PE equates to an 80¢ stock. Again, this points to a very cheap situation based upon estimated earnings. Of course, things can go wrong, but things can go very right as well and earnings might surpass estimates.
We believe that management is capable to lead TNGI to higher revenues and earnings, which, of course, could and should enhance the share price. We like Tenny Engineering, Inc. and, of course, we own it and anticipate profiting from it. Please keep in mind that it is speculative. We will be monitoring 10K in our $100,000 portfolio for % gain performance and 900# portfolio.
Corporate number: 908-686-7870. Broker Contact: Mike Chesler at 1-800-331-1355.
Select Financial Data - Year end December 31 First Quarter 1994 1995E 1995A 1994A Revenue 7.159 mil 8 mil 2.1 mil 1.3 mil Incomefrom operation (loss) (209) 295,000 130,000 (21,000) Net income/sh (loss) from (.05) .08 .035 (.05) contimuing operation