Why it is profiled?The company has revised guidance and initiated stock buyback
Deer Consumer Products Inc. (DEER) is a designer, manufacturer and seller of home and kitchen electric appliances. The company's products are sold to both global and Chinese domestic consumers. In February of this year, the company initiated product sales to Wal-Mart Stores in China.
The company is witnessing increased customer interest from global buyers, primarily from the North American, European and emerging markets. Last month, Deer signed a total of about $10 million in new supply contracts with existing and new customers.
Earlier in the month, Deer reported stellar first-quarter 2010 results. Net income for the quarter was $4.04 million, an increase of 515% while per share earnings were $0.12, an increase of 300% over the year-ago quarter. Revenues for the quarter were up an impressive 248% to $23.9 million. The gross margin for the first quarter of 2010 was 28.8%, up from 24.2% in the year-ago quarter.
With customer demand for its products being robust across all product lines since the beginning of the second quarter, Deer has boosted its earnings outlook for 2010 to $26 million from its prior forecast of $24 million. The company has also raised its revenue forecast for the year to approximately $160 million from its previous guidance of $155 million. Wall Street analysts are looking for revenue of $158.43 million. The revised outlook compares with earnings of $12.4 million and revenue of $81 million in 2009.
Buoyed by robust existing and new order flow pipelines, Deer sees only little execution risk in achieving and potentially exceeding the new earnings growth targets.
Last April, Deer effected a 1 for 2.3 reverse stock split of its common stock and in October of the same year, effected a 2 for 1 forward stock split of its common stock. Deer's stock got uplisted to the NASDAQ Global Select Market from the NASDAQ as recently as April 21, 2010. The NASDAQ Global Select Market is for public companies that meet the highest listing standards in the world, with measures including market value, liquidity and earnings.
Despite the company's growing business and strong balance sheet, the stock has lost nearly 32% of its price over the year-to-date period and trades around $7. According to the company, the current valuation is irrelevant to its fundamentals.
In light of the low valuation, Deer has initiated a stock buyback program, which allows it to purchase from time to time in open market transactions, up to $20 million worth of its common stock. As of the first quarter of 2010, Deer had more than $75 million in cash (or $2.31 per share in cash) without any long term debts or bank credit needs.
Deer's management currently owns about 50% of the company's entire shares outstanding. All of these management-controlled shares are locked up for 3 years and are restricted from selling to the public market prior to January 2013, according to the company.
With the company's sales poised to grow along with China's consumer disposal income growth, and the management taking proactive actions in enhancing shareholder value, investors may find this stock an attractive investment.
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May 08, 2026 15:50 ET Manufacturing and services sector survey results and labor market data from main economies were the highlight on the economics news front this week. Factory orders and jobs report dominated the news flow in the U.S. Similarly, industrial production data from German garnered attention in Europe. In Asia, purchasing managers’ survey results from China and the central bank decision from Australia were in focus.