ASEI gets the orders we were waiting for (ASEI)
During the most recent earnings call, Anthony Fabiano, CEO of American Science and Engineering (ASEI), promised that there were big orders from the US government likely by the end of the year ... but that he couldn't yet disclose anything about them.
Today, the news came out on two large contracts -- and if he had disclosed anything about these, I think I can guarantee that the stock would not have fallen after the last earnings release. (I bought shares both before and after the last earnings announcement, FYI)
ASEI is a security company with proprietary X-ray backscatter technology, and they sell a variety of products for detecting weapons, contraband, and other unwelcome materials on persons and in luggage, trucks, cars, packages or cargo containers. Their primary product right now is the Z-Backscatter van (ZBV), a mobile backscatter X-ray system built into a van. And their primary customer for that product, though overseas sales have also been solid, has been the US Government, which is deploying them both domestically and in hotspots around the world.
The fear has been that ASEI has saturated the market for ZBVs, at least with their largest customer, and that none of their other products are yet ready to make up the slack for potentially declining ZBV sales.
But today's news makes that fear seem silly -- today, ASEI confirmed that the US Government placed its largest order yet for ZBVs, $42 million for 36 vans.
So that's huge.
But potentially even larger is the more surprising announcement that came out today: ASEI is sharing a huge federal contract for a new nuclear detection system for cargo containers with SAIC and L-3. Huge for them, at least, since ASEI is a small cap company with a market cap well under $5oo million and sales in the last twelve months of just about $160 million.
This new contract, which likely relies somewhat on ASEI's current gantry scan product for scanning containers as well as their existing radiation scanning tools, is much bigger than the already quite large ZBV deal: 1.35 billion dollars split across seven years, with the first couple of years designated for designing and testing a prototype and the potential for each company to get $450 million if they develop a working prototype.
And if Congress passes a law requiring this kind of scanning for all cargo, which as a citizen I think is long overdue, I think we can assume that this will be just the tip of the iceberg -- it would take a massive infusion of cash to extend this program to every single port in the country.
So, the lesson? Maybe we should listen when Anthony Fabiano tells us he's optimistic and sees great growth and some big orders coming their way. I'm actually quite surprised that ASEI is seeing only a small bump of 4% or so today, and I picked up a few additional shares at $46.70 this morning.
Today, the news came out on two large contracts -- and if he had disclosed anything about these, I think I can guarantee that the stock would not have fallen after the last earnings release. (I bought shares both before and after the last earnings announcement, FYI)
ASEI is a security company with proprietary X-ray backscatter technology, and they sell a variety of products for detecting weapons, contraband, and other unwelcome materials on persons and in luggage, trucks, cars, packages or cargo containers. Their primary product right now is the Z-Backscatter van (ZBV), a mobile backscatter X-ray system built into a van. And their primary customer for that product, though overseas sales have also been solid, has been the US Government, which is deploying them both domestically and in hotspots around the world.
The fear has been that ASEI has saturated the market for ZBVs, at least with their largest customer, and that none of their other products are yet ready to make up the slack for potentially declining ZBV sales.
But today's news makes that fear seem silly -- today, ASEI confirmed that the US Government placed its largest order yet for ZBVs, $42 million for 36 vans.
So that's huge.
But potentially even larger is the more surprising announcement that came out today: ASEI is sharing a huge federal contract for a new nuclear detection system for cargo containers with SAIC and L-3. Huge for them, at least, since ASEI is a small cap company with a market cap well under $5oo million and sales in the last twelve months of just about $160 million.
This new contract, which likely relies somewhat on ASEI's current gantry scan product for scanning containers as well as their existing radiation scanning tools, is much bigger than the already quite large ZBV deal: 1.35 billion dollars split across seven years, with the first couple of years designated for designing and testing a prototype and the potential for each company to get $450 million if they develop a working prototype.
And if Congress passes a law requiring this kind of scanning for all cargo, which as a citizen I think is long overdue, I think we can assume that this will be just the tip of the iceberg -- it would take a massive infusion of cash to extend this program to every single port in the country.
So, the lesson? Maybe we should listen when Anthony Fabiano tells us he's optimistic and sees great growth and some big orders coming their way. I'm actually quite surprised that ASEI is seeing only a small bump of 4% or so today, and I picked up a few additional shares at $46.70 this morning.
This article posted by One Guy @ 9/13/2006 12:04:00 PM 0 comments
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