Balance sheet Looking at the balance sheet, it would appear that Avalon Holdings Corp NYSEMKT:AWX is a fiscally stable company. Current assets cover current liabilities 1.8 times and debt is almost non-existent. Debt-to-equity is only 1%. Actually, net-cash works out at around $2.10 per share. The company’s book value per share is $10.7, which means at current prices Avalon is trading at a price-to-book value of 0.5.
Avalon Holdings performance Due to the fact that Avalon Holdings Corp NYSEMKT:AWX is a service company, profit margins are razor thin and operational gearing is high. Indeed, for full-year 2012 the company’s EBITDA margin came in at only 2.5%. This means that depreciation has a huge effect on the company’s overall profitability. Including depreciation and amortization, the company reported a loss for the year. Also see: Have You Got an Edge over the Markets? Stripping out non-cash items, Avalon Holdings Corp NYSEMKT:AWX was cash flow positive during 2012 and has been throughout the first nine months of this years. The company’s cash balance expanded 25% year-on-year through to the end of the fiscal third quarter.
Still, during the past four years, Avalon’s earning have been somewhat erratic, swinging between a small profit and small loss, but cash generation has averaged around $1 million per year, or 2% of revenues.