Stock is Worth a Nibble

Written by GSCR Staff   
Monday, 04 June 2012 10:02

In life as in business, there are companies that you root for.  One shining example of that notion is Dynavox Inc. (NASDAQ – DVOX - $1.39).  DVOX is the leading provider of speech generating devices and symbol-adapted special education software used to assist individuals in overcoming speech, language and learning challenges.

We are not just talking about people with mild issues.  DVOX’s speech generating devices provide a voice to people who are unable to speak as a result of severe cognitive and physical limitations due to ALS, stroke, traumatic brain injury, cerebral palsy, autism, etc. Think Stephen Hawking.

The Company also produces a line of special education software which is used as a publishing and editing tool to create interactive, symbol-based educational activities and materials for special education students.

How can you not want these guys to succeed?

The stock has been a disaster. Its most recent quarterly results are filled with lower sales, charges, and meaningful long term debt.  Moreover, since the Company’s products are no longer supported under the American Recovery and Reinvestment Act, and states have their own budget issues, financial guidance has been suspended.

The stock is up sharply from its low today.  Not sure if it is what we call a dead-cat bounce following reaching a new low, or if it is the start of sustained bottom fishing.  The current estimates for fiscal 2013, which ends June 2013, calls for a 10% decline in revenue and EPS anywhere from $0.13 – $0.23.  That represents a low-end P/E of 10x next’ year’s EPS, which may be reduced.

We are rooting for these guys and most of the sellers are probably out of the stock already, meaning it might have legs to move another 15-20% higher on small volume. Stock is worth a nibble and frankly, even if things go south, vultures would come in and scoop up the company for its products anyway.

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