THE COMPANY: The Eastwind Group Inc., based in West Conshohocken, Pennsylvania, is an investment holding company whose strategy is to acquire and consolidate small and medium-sized technology-driven manufacturing businesses. The company, which recently announced the acquisitions of Centennial Printing and Ivy Industries, is aggressively seeking acquisitions in six industry niches: publishing and printing, water treatment products, aerospace, sports and recreation, premium home products, and food products.
The Markets: The Eastwind Group has the following goals:
*Acquire underperforming middle-market manufacturing businesses in fragmented industries or those that are near or at the bottom of their cycle. Create dominant performers through consolidation, management restructuring and re-engineering.
*Expand the acquired businesses through further strategic acquisitions that support existing internal growth.
The Sizzle: The most appealing aspect of Eastwind is that management is focused on acquiring undervalued or underutilized assets at favorable prices and making them profitable. The improvement in profits of its two most recent acquisitions, Centennial Printing and Ivy Industries, suggests Eastwind is on the right track.
It is fairly early in this company's business cycle to draw the attention of large institutional investors; thus, Eastwind offers you the opportunity to invest in an undiscovered company that appears to have a promising future.
The Risks: The primary risk is that management may be unable to locate and execute acquisitions. There is also the possibility the company could purchase a business that will be hampered by future economic pressures, thus dampening future earnings potential. At this point, Eastwind must be considered a speculative investment.
Historical Financial Performance: The company has total assets of $13.7 million; its portfolio includes Princeton Academic Press, Wickersham Printing Co., Polychem Corp. and Lavelle Co. Revenues increased substantially during the first nine months of 1996, driven primarily by 40 percent revenue growth in Polychem, which manufactures and distributes water treatment products. Eastwind estimates 1996 fourth-quarter revenues of $11 million will result in overall revenue growth of 60 percent between 1995 and 1996.
Projected Financial Performance: Management indicates they are involved in discussions with a bicycle company; if this acquisition is completed, the revenue and earnings projections in the chart (below, left) could prove to be very conservative.