When last we left
Millicom Cellular (MICC) in early April we had a nearly $100 stock (
Apr 8: Closing Millicom Cellular) The stock ran up after we sold to $120 but about a week ago Monday was back to exactly where we sold (did I mention this is not a buy and hold market?) But after
an earnings miss a week ago Tuesday, the company has traded down to low $70s during a violent sell off.
- Shares of Millicom International Cellular SA declined sharply Tuesday after the Luxembourg-based wireless carrier reported second-quarter sales and profits that failed to meet Wall Street expectations.
- Millicom shares fell $22.02, or 22.6 percent, to close at $75.48.
- The company said earnings rose to $1.22 per share, up from 98 cents per share in the year-ago period. Revenue jumped 37 percent to $843 million, up from $613 million.
- However, analysts polled by Thomson Financial expected, on average, income of $1.34 per share on revenue of $864 million.
- Millicom provides cell phone service mostly in developing regions in Latin America, Africa and Asia that have little or no wireline infrastructure.
- Also Tuesday, Millicom said it has agreed to buy Amnet Telecommunications Holding Ltd. for $510 million, giving the company a boost in Central America, its most important region with 43 percent of worldwide revenue and 38 percent of subscribers.
I still like the story - the company is still growing at a rapid clip - it simply missed analysts expectations. The company is now very cheap on every metric;
2008 estimates have dropped from the $5.75 range to
$5.50 and
2009 from the $7.15s to
$6.75. I don't expect the future growth rate to be quite as stellar as the past few years, but 20-25% growth rates for a forward PE of under 14 should give us some leeway here.
This market seems to sell strength and buy weakness, but only if you time your entry into the "weakness" well. So MICC fits in that mold of a beaten down stock. Technically the stock is potentially forming a nice double bottom from levels last seen in September 2007. This is not the type of chart I normally buy because falling knives can remain falling for weeks, months, quarters on end.
