What Do EACO Corp’s New Risk Factors Tell Investors?

EACO Corp. (EACO) provides electronic components and fasteners through its subsidiary Bisco Industries. It provides solutions for production requirements to industries like aerospace, circuit board, communication, computer, instrumentation, industrial equipment, and marine.

Let’s take a look at the company’s financial performance and what has changed in its key risk factors that investors should know.

EACO Corp witnessed higher product demand amid relaxation from COVID-19 induced restrictions, which helped its Q3 revenue increase 14.1% year-over-year to $62.7 million.

Its selling, general & administrative (SG&A) expenses remained flat in Q3. This made the net income jump 75.5% year-over-year to $3.1 million. (See EACO Corp stock chart on TipRanks)

EACO Corp believes its business model of a local presence will continue to help it gain the market share.

Now, let’s look at what has changed in the company’s key risk factors.

According to the new Tipranks Risk Factors tool, EACO Corp’s two main risk categories are Finance & Corporate and Production, which account for 33% and 25%, respectively, of the total 24 risks identified. Since May, the company has added three new key risk factors.

Under the Finance & Corporate risk category, the company acknowledges that the amount of public float of its common stock is small (less than 5%). EACO Corp was also downgraded from QTCQB to the OTC Pink Open market. These factors could impact the market price of the company’s shares as investor participation becomes constrained.

Under Accounting & Financial Operations risk category, EACO Corp highlights that if it fails to maintain effective internal controls over its financial reporting, it may not be able to report accurate financial results or detect fraud. This could adversely impact its common share price and business.

Under the Macro & Political risk category, EACO Corp sees disruptions to its transportation network due to inclement weather and other factors as a key risk to its distribution system. The company states that hampered distribution systems or shipping ports may impact its ability to maintain core products in inventory and timely delivery of finished goods to customers.

Finance & Corporate risk factor’s sector average is at 51%, compared to EACO Corp’s 33%. Shares have gained 21% over the past year.

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