Cemtrex Inc (NASDAQ:CETX) Remains Undervalued

Cemtrex Inc (NASDAQ:CETX) is like finding a $100 bill and being able to buy it for much less. Shares are trading at just 7 times this year's earnings and 3 times next year's. This makes Cemtrex a cheap stock no matter how you're looking at it. The problem is that CETX has such a small float that institutions are hesitant to take a big position in the company. We believe this will be changing soon.Cemtrex describes itself as "a global, diversified industrial and manufacturing company that provides a wide array of solutions to meet today's technology challenges and is rapidly growing through acquisitions. Cemtrex provides manufacturing services of advanced custom engineered electronics, industrial contracting services, monitoring instruments for industrial processes and environmental compliance, and equipment for controlling particulates, hazardous pollutants, and Greenhouse gases used in carbon trading globally."The company just completed the acquisition of a German electronics manufacturing company Periscope. Periscope is focused on electronic manufacturing services primarily for the major German automotive manufacturers, including Tier 1 suppliers in the industry, as well as for industries like telecommunications, industrial goods, luxury consumer products, display technology, and other industrial OEMs.This is a smart acquisition because Cemtrex already has a German subsidiary in the electronics manufacturing sector and with this acquisition, it will secure a broader base and larger market share in the Euro zone. With Periscope, Cemtrex becomes a leading EMS company in Germany, ranking among the top 15. The European EMS market is expected to achieve a 10.1% CAGR from 2011 to 2017, according to German economic development agency Germany Trade & Invest. Cemtrex management anticipates substantial synergies with its existing portfolio of companies and cross-selling opportunities to its present and prospective customer base. The Periscope acquisition also gives Cemtrex a strong footing in the automobile industry, which is undergoing rapid technological change.Cemtrex intends to rebrand the Periscope operation under its ROB Cemtrex brand. Cemtrex completed the purchase of approximately €9 million Periscope assets through payment of cash, a third-party note and seller note. This acquisition is anticipated to be accretive in 2016 and involved no dilution to Cemtrex shareholders since no new shares were issued for this acquisition. Periscope is projected to generate annual revenue of about €30 million for the next twelve months. Cemtrex will also add 140 new employees thus bringing its total worldwide employees to over 515. Chairman and CEO Saagar Govil said:

“We are delighted to welcome Periscope to the Cemtrex family of companies. We expect to be at the forefront as the automotive industry transforms due to new disruptive technologies. The €30 million revenue contribution that we anticipate from Periscope combined with our existing operations pushes the Company over $100 Million in total sales over the next twelve months. This compared to the $47 million that Cemtrex generated in 2014 illustrates how much progress Cemtrex has made on its commitment to increasing its top line while delivering value to our shareholders.”

In looking at second quarter results, net sales for the three months ended March 31, 2016 increased by 32% to $18,908,100 from $14,330,940 for the three months ended March 31, 2015. Net Income for the three months ended March 31, 2016 was $829,896 as compared to $1,081,573 for the three months ended March 31, 2015. Excluding the impact of one-time acquisition and financing related expenses of $452,140, adjusted net income for the three month period ended March 31, 2016 was $1,282,036, representing an increase of 19% over the same period a year ago. This marks the fourth year in a row that Cemtrex has produced a profitable quarter. Adjusted EBITDA for the three months ended March 31, 2016 was $1,850,631 ($0.23 per share) as compared to $945,724 ($0.14 per share) for the three months ended March 31, 2015, representing an increase of 96%.Currently trading with a market cap of $23 million, CETX is a profitable NASDAQ listed company trading at below a 10X PE. The company is on track to do over $100 million in revenues this year. We feel that it's only a matter of time before institutional buying steps into CETX and takes a significant position. The good news is that today's investors can get in on CETX before this happens and that is how real money is made on Wall Street. We will be updating Insider Financial as soon as we know more. For continuing coverage on CETX, sign up for our free newsletter today and get our next hot stock pick!Disclosure: We have no position in CETX and have not been compensated for this article.