NASDAQ:PBSV
READ THE FULL PBSV RESEARCH REPORT
Pharma-Bio Serv (NASDAQ:PBSV) announced results for the quarter ended July 31, 2024. The headline revenue and earnings releases were below expectations for the third-consecutive quarter, but management issued some positive comments regarding future prospects. Management noted that, “We have made key investments in technological tools to identify attractive global business opportunities, which we anticipate will return the Company to profitability and grow revenues.” The company had revenues of $2.4 million, which was $2.2 million below the year ago revenue, while earnings of $300,000 were roughly $200,000 below the year ago reading.
We believed the company needed to invest in improved technology and expand its presence in the marketplace, while bringing in new customers and fostering profitable partnerships and are pleased to hear that the company is making the investments required to achieve those goals. The previous few quarters were certainly disappointing, but we believe a period like this is needed to move the company forward. We are hearing statements about investing in the future that we haven’t heard for a while, and we believed were necessary to take this company to the next level. Sometimes a company must take a step back in order to move forward in a meaningful way and we believe this is one of those cases.
For investors, however, the company continues to focus on rewarding shareholders. Pharma-Bio Serv again paid a dividend of $0.075 per share for shareholders of record as of January 30, 2024 and we believe management is committed to continuing to pay this dividend. This announcement continues a trend for the company of rewarding shareholders with a healthy dividend. We believe this makes a nice combination and urge investors to look at the under-the-radar stock for a potential addition to a portfolio.
Additionally, the balance sheet continues to look solid. At first glance it appears that the company’s cash balance has decreased from $10.5 million in October 2023 to just under $6.5 million. As we’ve discussed before, the company has done something with that “missing” cash that we believe is much smarter and will benefit the company and shareholders—management has decided to invest around $6.3 million in US Treasury Bills. With recent yields on T-bills between 4-5%, this move allows the company to hold cash equivalents that are actually earning a nice yield, while remaining safe and liquid—a win, win for investors and the company and adding to the revenue for Pharma-Bio Serv. Additionally, the solid liquidity of the company means that management has the internal funds needed to make the investments that will get PBSV back on the growth trajectory investors want to see.
Despite the revenue decline, the company continues to have a solid business model in our view, and we are pleased to see investments being made in expanding that business. These facts continue to lead us to continue to have a positive view on PBSV stock, but the company needs to show progress throughout 2024 and into 2025, and we are confident they will.
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