Monday, September 10, 2007

Syntax Brillian Corp (BRLC) Individual Stock Analysis/Commentary

Syntax Brillian Corp (BRLC)

As a consumer, you have probably never heard of Syntax Brillian before, and have no idea what they do. However, there's a good chance you have probably seen their products, and you might even own one yourself; they make LCD High-Definition televisions, under the brand name Olevia. Olevia is a discount brand; a fully-priced Olevia high-def TV may be 30% cheaper than a Sony that's on sale.

A major reason why I'm looking at the stock is because people seem to like the TVs: here is example from Cnet only gives the TV a 6, but 33 reviews contradict (some directly calling out!) Cnet's rating; the average user review is an 8.3, or "Excellent." I'm not going to try to sell you a TV, so I won't provide any more examples directly. Other sites I looked at had reviews of 7s or 8s out of 10, or 4 stars out of 5. It seems to be a good product at an excellent price.

One last example of how great of a deal the TV's are: here is a page from circuit city's website, featuring LCD TV's in the medium-size range. Notice that Olevia are the cheapest, followed by another discount brand (Vizio), and then the major manufacturers are hundreds of dollars more.

So how is that going to help BRLC increase in price? Here's my train of thought:

  • Short Term:
    • Retailers have been doing pretty well this summer, even during the "credit crunch" and worries about a recession. TV's should mirror that trend.
    • It's baseball playoff time, and the start of football season, which is a major time of HDTV purchases.
    • If consumers are becoming tight on money, what kind of TV are they going to buy? The well-reviewed, discount brand that's two-thirds of the price of the competition.
  • Long Term:
    • They have recently swung to profitability, and their forecasts are for a continued increase in revenue and profits. The TVs are appearing at more retailers across the country; the brand has plenty of room to grow.
    • The fundamentals, based on current estimates, are solid: it's forward PE is only 8, based on today's pricing and estimates. For a high-growth company, that is ridiculously low. As long as BRLC doesn't guide lower, shares should have plenty of room to grow.
    • I think that many Americans will be replacing the last generation of picture-tube TVs with the new LCD or Plasma TVs over the next 10 years. BRLC's position as a discount manufacturer is excellent to capitalize on that potential trend.

Here are revenue estimates: keep in mind these could change at any time, but assuming these figures are correct, they are very promising:

Revenue Est Current Qtr
Next Qtr
Current Year
Next Year
Avg. Estimate 198.11M256.58M690.47M1.27B
No. of Analysts 5555
Low Estimate 195.00M228.64M687.36M1.12B
High Estimate 207.72M270.70M700.08M1.54B
Year Ago Sales 59.81M87.02M192.99M690.47M
Sales Growth (year/est) 231.3%194.9%257.8%84.5%

BRLC is set to report earnings tomorrow, September 11th, after the bell. The earnings, and future guidance, will dictate much of the company's future. I honestly would not suggest getting into the company tomorrow, before the earnings come out, because that's a very risky play that could lose a significant portion of the investment. However, after the numbers and future projections come out, the picture will be clearer on whether BRLC is still the great long-term deal it appears to be today.

Plus, a very high percentage of shares are currently shorted, so if earnings are positive and the stock price goes up, a short squeeze could easily propel the price even higher. But like I said, don't enter a long position at this point; wait until earnings are released. Even if you miss some positive movement, the buying opportunity will not be lost.

I have been long on BRLC for a few days now, in anticipation of earnings, simply because the risk versus reward is worth it for me. Remember, anything written on this blog is for entertainment purposes only, and in no way is financial advice that you should act upon.

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