IN ITS APRIL 13TH ISSUE, THE RED CHIP REVIEW, a "Self-Described, Unbiased Word on Small-Cap Stock," sees it clearly: "General Bearing to grow revenues in 1999 by 27%, reaching $57.5 million."
Red Chip bases this on the fact that "In fourth quarter 1998, several contracts reached full shipping volumes, many of which are expected to remain firm or grow in 1999." In addition, "results from first quarter 1999 and forward will offer legitimate apples-to-apples comparisons, since tax-loss reserves are now off the books."
Since continued growth in our OEM business suggests that the gross margin will remain at the current levels, or 31%, The Red Chip Review also believes that "General Bearing can continue decreasing its operating expenses as a percentage of revenues. In doing so, their earnings would increase in 1999 to $3.9 million, or $0.97 per share."
Additionally, as reported by Red Chip, " ...There were several contracts and agreements announced in the final weeks of 1998 that are likely to influence this year's results. First, the Company reported that its shipments to Ford are at full volume, which we estimate to be roughly $1.8 million per quarter. Second, General Bearing was awarded 'unconditional approval' from the Association of American Railroads to sell tapered journal roller bearings to the railroad industry. We expect General Bearing to capture at least a few percentage points of this $200 million market. And finally, we expect General Bearing to gain some new business from its relationship with Kodak, but we have not factored anything into our model."
Finally, Red Chip observes, "General Bearing has established a handsome operating-performance trend in the last six years which has been obscured by the way it has had to account for its corporate tax situation. Confidence in the Company reaching our growth projections is high, based on the many growth opportunities detailed above. We believe General Bearing's earnings trend will receive its proper recognition in 1999."