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Ingram Micro Misses View, Hits 14-Year High

NEW YORK ( TheStreet) -- Yesterday, Facebook's (FB - Get Report) earnings release and the stock's subsequent run-up dominated headlines, obscuring most other company related news. On the day, Facebook added $19 billion in market cap after reporting better than expected revenue and earnings; an amount that is roughly the market cap of Hershey Foods (HSY).

It looks like investors love affair with Facebook love affair is back on, at least for now, even as Facebook users are at least anecdotally becoming weary of the application. I still don't quite get it, but was somewhat amused to see a couple of firms raise their target prices on the stock to the low- to mid-$40's, near where the stock briefly traded on May 18, 2012, its first day as a public company.

The more interesting news, to me anyway, came via Ingram Micro's (IM - Get Report) second quarter earnings release. The company, a member of my BITES BITES portfolio, comprised of seemingly small and cheap technology related names, put up a pretty solid quarter, and finished the day up 10% at $22.81, which is a 14 year high. While revenue of $10.3 billion came in slightly below the $10.4 billion consensus estimate, earnings per share of 55 cents were well ahead of the 46 cent estimate.

Ingram has historically been a high volume/low margin business with net profit margins in the 0.7% to 0.9% range. The acquisition of Brightpoint, which contributed $1.2 billion of revenue for the quarter, and is a higher margin business, should ultimately help improve the bottom line. For the quarter, Brightpoint was accretive to gross margins by 58 basis points, which came in at 5.78%, up from 5.15% for the same quarter last year.

Ingram's balance sheet remains solid with $727 million or $4.77 per share in cash, up from $595 million at year end 2012. Total debt stands at $885 million, down from $1.05 billion at year end. During the first six months of this year, the company demonstrated an ability to generate cash, with $289 million in free cash flow. The company, formerly a "net/net" (company trading below net current asset value), still trades at just 1.44 times net current asset value, and 1.1 times tangible book value, even after yesterday's gain. IM Chart IM data by YCharts
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