Itex (OTCPK: ITEX) fell to a low of $3.03 today from yesterday’s closing price of $3.61 (a 16.1% plunge), down over 25% from its highs earlier this month – though it has since rebounded to $3.47 as I write this. The ITEX 10-Q filed with the SEC prior to today’s open indicated a year-over-year drop in revenue from $2.814 to $2.564 million (8.9%) for the quarter ending in October, as well as a decline in net income from $155 to $136 thousand (12.3%).
Significantly, however, the company’s cash flow from operations actually increased year-over-year for the October quarter from $360 to $363 thousand. Multiplying ITEX’s price of $3.47 by its 1.965 million weighted average shares outstanding results in a market cap of $6.82 million. Annualizing the most recent quarterly cash flow gives us $1.45 million and an annual cash flow yield of 21.3% ($1.45 divided by $6.82).
I feel that annualizing the quarter’s cash flow is appropriate, since its revenues were very close to ¼ of revenues for the year ending in July, $2.564 million being 23.1% of $11.110 million.
It should also be noted that ITEX indicated a cash balance of $3.655 million, enough to pay off all $1.452 million of its liabilities and still have over $2.2 million in cash left over. In the absence of special dividends and/or stock buybacks, I would expect ITEX’s interest income to become increasingly significant as interest rates rise.
Needless to say, I believe ITEX stock is a tremendous bargain at its current price, and I own it.
In this week’s DDIM.com ratings, ITEX is in the top decile of stocks to consider for purchase. Of the 3115 stocks covered by DDIM.com this week, ITEX was ranked #44.