Thursday, October 30, 2014

LoJack Slid 22% Today, One of the Nasdaq’s Worst Performers

LoJack reported third-quarter earnings before the bell this morning, and investors ran for cover.


One of the worst-performing stocks on the Nasdaq today was LoJack (LOJN), which reported its third-quarter earnings before the bell this morning.

Today’s subsequent 23% price drop (amid trading volume nearly eight times higher than average) reaffirmed the public’s decreasing confidence in the future of the vehicle-tracking and recovery company.

It was also announced that Kenneth Dumas, who has been LoJack’s acting CFO since Donald Peck left the company this past May, will officially retain the position going forward. Apparently, however, Dumas’ appointment held little sway over investor confidence today.

While LoJack has continued efforts to remain relevant for both consumers and enterprises, the only plausible revenue potential seems to be on the enterprise side. Since January 2013, LoJack has been working with TomTom (TMOAF) to push the latter’s fleet management systems through North American car dealerships. Last month, LoJack announced the upcoming release of the TomTom Pro 8000 series of fleet management products, and yesterday announced the solution is now operational in Canada and Mexico.

Unfortunately, the Street hasn’t rallied behind either company in anticipation of future enterprise vehicle-tracking solutions. LoJack shares are down more than 37% since the initial September announcement, and TomTom shares are down more than 8%.

An interesting trend worth noting is that for five of the past ten months, LoJack has had the highest debt-to-EBITDA ratio in the electronic equipment industry, with the most recent No. 1 ratio being just above 13. Earlier this month, LoJack was downgraded from “hold” to “sell” by TheStreet, which cited the company’s drastic decreases in net income (down almost 229% year-over-year) and net operating cash flow (down nearly 113% YoY) as major contributing factors.

Apparently, the likelihood of this microcap breaking into the fleet management niche isn’t too confidence-inspiring, even considering the company’s new partnership with TomTom alongside its long-standing deals with law enforcement agencies across the country. In theory, the LoJack concept sounds reasonable, especially for the enterprise market where large fleets of vehicles need to be tracked and protected.

Why, then, has this stock experienced such a steady decline over the past seven months? LoJack’s 52-week high of $6.85 was in March, but share prices haven’t even come close to that ceiling for several months. Today’s closing price of $2.63 is almost 62% off the 52-week high, and there doesn’t appear to be anything significant in the coffers that could put the brakes on this slide.





This article is a Twisted Nonsense Exclusive! (10/30/2014)

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