Zacks Research's recent report on DPW states:
DPW: Spending on Acquisitions Ramps Losses With Big Revenue Ramp Expected to Follow
Based on the expected 2017 revenue forecasts and an industry average of 1.6x EV/Sales, we believe DPW could be worth $1.02 in the next 12 months.
Here are just 3 of 8 Highlights cited about DPW:
- Digital Power reported Q2 revenues of $1.8 million versus $2.1 million last year, below our expectation. Q22017 included only $223,000 of revenues from Microphase, which was acquired on June 2, 2017. Had the company owned Microphase for the entire quarter, revenues would have been $2.7 million, (which means Microphase generated $1.1 million in revenues in Q2 2017, the same as in Q1 2017.) The shortfall was in part due to an order that was not fulfilled as Digital Power awaits certification and approval from a large customer on a new generation product. That order slipped out of the quarter and has still not shipped.
- Gross margin on the $1.8 million increased to 40% from 37% due to a change in product mix to higher margin commercial sales, though this was down from the 43% in Q1 2017. We expect gross margins to vary greatly as sales from Microphase and Power Plus Technical Distributors, and to MTIX and PoW Digital Mining, kick in throughout future quarters.
- Minority interest was an $112,000 reduction in losses from the 44% of Microphase that Digital Power does not own. We expect Microphase to reach profitability in Q3 as Digital Power has right sized the business, eliminated overhead redundancies, and begun to cross sell to customers. In addition, it has received meaningful new military orders now that it is under the auspices of Digital Power who has invested resources into the company and provided transparent financial stability.
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