Ceapro updated August 21, 2017

Our report for Ceapro is updated and rated Speculative Weak Buy / Hold at $0.65.

This company has been disappointing in a number of ways. Its revenues have decreased sharply in each of the past three quarters. This led to earnings plummeting. What is even more disappointing and perplexing is the almost total lack of explanation of the reasons from management. In fact the press release starts out by listing big declines and then stating “This positive past quarter…” I find it difficult to trust a management that behaves this way. When first added to this site in February based on its earnings through Q3 2016, the company had a profitable base business and it looked like its products under research development would be a possible addition to that profitable base. It also appeared to be growing earnings rapidly at ┬áthat point. Now, it seems the base business could decline close to break-even given the revenue decline and given the added costs of a recent expansion (which costs have not yet hit the books as the new equipment is not yet considered commissioned for some reason). So, now the company looks like more of a lottery ticket. This was indicated as a Speculative pick from the start but it looks even more speculative now.

I am often inclined to average down on stock price declines. In this case, given my deep concern about what I see as a lack of disclosure, I have no plans to add to this position. I made only a small investment in this penny stock and I will maintain that investment rather than sell now at a loss.

On a brighter note, the company does have sufficient cash and only modest debt. Therefore I don’t think it is in any danger financially.

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