November 4, 2004
All Is Well At Caldwell...
...for the moment

On Tuesday Caldwell Partners announced financial results for fiscal 2004 (ended Aug 31, 04). The news was positive:

1)   The company reported its first increase in quarterly year-over-year revenues since 3Q02

2)   The company declared its first dividend payout since 2001. 

3)   The company logged a 6.3% increase in net equity in 2004 (equity increased by 5.5% and          2.8% in 2003 and 2002 respectively).

Noting a 35% increase in “new business bookings for search engagements”, Mr. Caldwell was optimistic that growth in earnings and revenues could continue through 2005. However, since the company does not consistently track ‘business bookings for search engagements’, it is difficult to calculate how significant, if at all, Mr. Caldwell’s statements are.  Quite frankly, and remembering the unexpectedly high rate of cancellation during the quarter ended August 2001, it is difficult to ascertain how meaningful any forecast is if an unplanned for economic downturn should transpire.  To be sure, Caldwell’s business is extremely susceptible to unpredictable economic/labor market trends.   

In short, Caldwell’s latest financial numbers are encouraging, the dividend announcement was a pleasant surprise, and - at least in the immediate term - all indicators suggest that the company is performing well. These positives aside, we would not purchase shares of Caldwell at current prices ($1.90+). Moreover, and depending upon the circumstances, we would consider selling should shares go above $2 a share. We have owned Caldwell shares for nearly three years.

Links
Caldwell PRFinancial Statements PDF
Wish List 2002 PDF




BWillett@fallstreet.com

TAlway@fallstreet.com