Annual Follow Up

What was said 12 months ago
Updated recommendations from our August 20, 2004, edition

Investor’s Digest
August 19, 2005

Buhler Industries
BUI-TSX, $7.35 ($6.75), 888-524-1003, www.buhler.com

Ben Cherniavsky, an analyst with Raymond James, continues to recommend Buhler stock with a "market perform" rating and a six-to12 month target of $7.50 a share, up from $7.05 previously.

On July 21, the farm-equipment manufacturer reported earnings for the third quarter of 2005 of $0.11 a share, compared to Mr. Cherniavsky’s forecast of $0.13 and $0.17 a share reported in the similar quarter last year.

Of note, last year’s third-quarter numbers included a $0.05 per share gain due to the sale of two buildings.

"Revenue grew a modest one per cent to $58.3 million," says the analyst. 
"This was a few million dollars shy of our estimate."

More important, gross margins increased sequentially for the third consecutive quarter, and at a better-than-expected clip.

"While this suggests to us that Buhler’s recent price increases are, on balance, paying off, the margin improvement was not significant enough to offset the quarter’s revenue shortfall," says the analyst.

As a result, gross profit came in marginally below his estimate, which accounted for the two-cent miss in earnings.

In short, Mr. Cherniavsky remains a believer in Buhler’s long-term story, primarily due to the company’s impressive track record of shareholder value creation, its strong management team, promising market penetration opportunities and healthy financial position.