PD-Rx Pharmaceuticals posted their 2017 annual report online yesterday. Last year was a pretty solid year with revenues increasing by 21% from $21.5 million to $26.0 million. Net income saw a similar percentage increase and went from 0.30/share to 0.36/share. Given that PD-Rx’s past revenues have been somewhat volatile I don’t think we should put to much weight on this growth, they are now basically back to the level they achieved in 2013. As always, the company provides a nice overview of historical annual sales in a “classic” PowerPoint look:
Besides good operating performance there were two positive developments during the year. First of all, the company paid its first ever dividend in June this year. Compared to PD-Rx’s cash balance of $4.85/share the dividend of $0.30/share was not very big, but it does represent a 82% payout ratio for the year. Hopefully this wasn’t a one-off occurrence.
Secondly, the passage of Trump’s tax bill should provide a nice boost to earnings in the years to come. PD-Rx Pharmaceuticals, like many US micro-caps, pays the full US corporate tax rate, so the drop from 35% to 21% should boost earnings by approximately 22%. If we crudely value PD-Rx at the value of its cash balance plus ten times 2017 earnings, value per share jumps from $8.49 to $9.33 if we adjust for the lower tax rate. Given that shares currently trade at $5.65 I still think they offer a pretty compelling opportunity.
Disclosure
Author is long PDRX
PDRX announced a 0.66 dividend record date 4/30, payment 5/9
Yes, that was a nice surprise 🙂
PDRX announced a $2.20 dividend to paid December 12th.
That’s quite a substantial dividend, good to see that they are doing something with their cash 🙂
Can’t find the dividend news. Where did you find it? Thanks.
See for example here: https://www.otcmarkets.com/stock/PDRX/security
The $2.20 dividend is payable to holders as of November 30, so I’m surprised to see the stock still hanging in above $6.50. Even if you take the weekly high of $7.24, you would think the $2.20 dividend would drop the share into the $5.00 or slightly higher as PDRX should now be seen as more shareholder responsive.
I sold mine at $6.71 and expect I will be able to buy back a lot cheaper in a few weeks when people receive the dividend and realize the stock value has decreased.
Thanks for your shares Brent! Maybe do a little bit more research next time before you sell your super illiquid microcap holding. Google ‘special dividend’.
Brent, there’s a rule, promulgated by FINRA I believe, that if a cash dividend is more than 20-25% of the value of stock, the pay date is also the record date. In other words, anybody that holds PDRX shares through the pay date of 12/13 will receive the dividend. The stock price will adjust for the dividend at the open of trading on 12/14…
Thanks Microcaptian. Press release misleading as states record date was November 30th. I’ve often seen press releases specifically call out that trading will include the dividend until the pay date in other special dividends situations, but this did not do that either.
Oh well, stock has a highish p/e, so I was thinking of cashing out and I still did make 47% since my purchase in 2017, so not the end of the world.
pietje, no need to be snarky about things – see Microcaptains response for a better approach
You made a very bad decision based upon a misunderstanding of how the stock market works and a lack of self-reflection. In a super illiquid stock there’s suddenly volume at high prices – completely incongruent with your theory about the dividend. So either the entire market is wrong about the dividend or you are. But instead of figuring our if you are mistaken you blindly sell your shares and brag about it here. And when people tell you that you made a mistake you try to justify what you did after the fact by saying “oh well it was expensive anyway and I made a profit” A classic case of thesis drift.
If you do stuff like that you are the ‘fish at the table’, as they say in poker. Do you think the author of this blog also sold his shares at 6.71? Of course not, he’s actually making money from uninformed market participants doing stupid stuff like that. I think it’s actually beneficial for you that I point that out in a blunt manner. Spare the rod, spoil the child.