Everything seems to be going just dandy for Del Global Technologies (DGTC): It has upped earnings in each of the past 14 years. Its revenues should hit $100 million, up from last year's $68 million. And the Food & Drug Administration has just O.K.'d its new radiographic and fluoroscopic probing device--which will bump up next year's figures. Yet shares of Del, which is a supplier to some of the largest makers of medical imaging systems, including General Electric, Siemens, and Philips, are trading not far from its 52-week low, at 9 a share.
"The stock trades at book value and at about nine times our 2000 earnings estimate of 93 cents a share," says Jeffrey Holmes of Tucker Anthony Cleary Gull, who rates Del a "strong buy." He says the stock deserves a p-e ratio of 15, which would hike the price to 14.
One California money manager who has been buying shares says that a medical device maker and a European conglomerate were interested in acquiring Del at 14. But management, says this pro, told suitors it had other plans.
Chairman and CEO Len Trugman wouldn't comment on any suitors, but he argues that his goal is to double Del's 1999 earnings by next year. With more acquisitions and new products, he says, "we will get there soon enough." Some investors believe Trugman would opt to sell only if he were offered at least 20 a share. "He may yet get such an offer," says the California money manager.