PSA profit margins going forward
tennesseebanker
Posts: 5,433 ✭✭✭
I am in no position to tell management and/or the Board how to run Collectors Universe. But it seems that they would want to expand into growing areas of collecting, as the coin and card side of the business appears to have matured. There are several different areas of rapid growing grading businesses which CU could either use their stock and/or cash to purchase ,or just develop the business line themselves. Comics and magazines would be one area, while Toy grading would be another, I'm sure there are probably others out there. If CU is going to continue to grow as a company eventually they are going to have to expand outside their comfort zone. As a publicly traded company growth is always seen as a premium investors are willing to pay up for. I'm just wondering how much longer CU can see growth in their current lines of business ?
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<< <i>I'm just wondering how much longer CU can see growth in their current lines of business? >>
Before they expand into different collectibles, I would think that they would want to expand their world wide presence first. I know that CU has opened offices in Asia over the past several years. That is probably an area (along with possibly some European markets) where they would want to concentrate before expanding into different collectibles. I'm sure there are MANY coin collectors in the Asian & European markets.
Doug
Liquidating my collection for the 3rd and final time. Time for others to enjoy what I have enjoyed over the last several decades. Money could be put to better use.
One of the reasons PSA embraces all types of cards is for growth. A large number of collectors on here make fun of wrestling cards but if you look at the growth in the number of cards graded by PSA it has to be on a percentage basis the fastest growing segment in the past five years. As a business you have to put personal preferences aside and obviously they have by allowing the threads to stay on the main forum and to feature the cards in the SMR.
In order for CLCT to prosper going forward I would think your suggestion is a good one and perhaps something they have thought about. You have to find new areas of cards to get graded to offset the lack of cards from the 80's being sent it and to your point perhaps different items all together.
Toy grading and comic grading have got to have good margins and I would think they would have the ability to buy the cases at cheaper prices and leverage their brand for further growth.
CLCT has a great balance sheet so an acquisition or joint venture could easily be done.
<< <i>As a long time toy collector, I do know that one of the hottest items right now is paperwork and cardbacks that came with action figures and playsets. Afa only grades loose toys and MOC items. Something to think about. >>
AFA is pretty much like most other grading companies. They will grade almost anything you send them if they think they can profit from it. To say they only grade loose toys and MOC items is kinda like saying PSA only grades cards loose or in a pack. AFA will grade pretty much any toy whether it is loose, in the original packaging, or even still in the case it was shipped to the store in. Heck, they will even open carded figures and grade the figure loose and give it a "U" grade. Which is another subject altogether.
As far as PSA and expansion, I think they're sticking to what they know best, if they get into other markets, and fail, it could look poorly on the company as a whole.
<< <i>I understand comic grading, and will only buy key books that have been graded, however, I can't stand not being able to read the book! I think a great service would be to digitize the customer's comic prior to encapsulation, optional, and for a fee, of course.
As far as PSA and expansion, I think they're sticking to what they know best, if they get into other markets, and fail, it could look poorly on the company as a whole. >>
They are doing what they do best. However, at some point as a public company investors are going to want growth, which most likely will come outside of their current business lines. When you think about it, grading collectibles is such a niche area anyway, and grading coins and cards is an even more specialized area of an already specific business.
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<< <i>As a long time toy collector, I do know that one of the hottest items right now is paperwork and cardbacks that came with action figures and playsets. Afa only grades loose toys and MOC items. Something to think about. >>
AFA is pretty much like most other grading companies. They will grade almost anything you send them if they think they can profit from it. To say they only grade loose toys and MOC items is kinda like saying PSA only grades cards loose or in a pack. AFA will grade pretty much any toy whether it is loose, in the original packaging, or even still in the case it was shipped to the store in. Heck, they will even open carded figures and grade the figure loose and give it a "U" grade. Which is another subject altogether. >>
To my knowledge afa does not grade stand alone paperwork, cards that were issued with toys, cardbacks and boxes. I am aware of the U grade. I am on the "support committee" to have it stopped. Ukg did it.
<< <i>
<< <i>
<< <i>As a long time toy collector, I do know that one of the hottest items right now is paperwork and cardbacks that came with action figures and playsets. Afa only grades loose toys and MOC items. Something to think about. >>
AFA is pretty much like most other grading companies. They will grade almost anything you send them if they think they can profit from it. To say they only grade loose toys and MOC items is kinda like saying PSA only grades cards loose or in a pack. AFA will grade pretty much any toy whether it is loose, in the original packaging, or even still in the case it was shipped to the store in. Heck, they will even open carded figures and grade the figure loose and give it a "U" grade. Which is another subject altogether. >>
To my knowledge afa does not grade stand alone paperwork, cards that were issued with toys, cardbacks and boxes. I am aware of the U grade. I am on the "support committee" to have it stopped. Ukg did it. >>
Yeah, I didn't intentionally mean to state that AFA would grade anything, it would have to have a toy associated with it. I also support stopping U-grading by pulling figures from the MOC's. As far as pulling MOC's from a sealed case though I don't see anything wrong with it.
TheClockworkAngelCollection
<< <i>CU is very clearly the best of the best in coins and cards. They do a lot right and provide a quality service. However, complacency in those areas could backfire. As good as they are, there are many areas that could use some improvement. I think the biggest trap successful companies can fall into is over expanding or trying to do too much, rather than continuing to improve and not being satisfied with their place in the market. I think pumping those profits back into what they are already doing would be a win for everyone. >>
Good Assessment, but is expanding into other areas of grading(an area they are already in) really over extending their place in the market ?
They call me "Pack the Ripper"
<< <i>How much startup money is really required when it comes to grading? Let's say PSA decided to start grading vintage matchbooks or matchbox cars or antique marbles. Aside from people and office space, what other large expenditures are there? They already have the slab making hardware. >>
Thats a great question. I have always thought that a lot of the start-up expense would be from training the graders what to look for. So, unless they enticed a few toy graders from AFA (for instance) to switch companies I think that could be a big expense.
Do they actually have the hardware to make slabs ? I've always thought it was supplied by an outside company to PSA's specs.
I guess the bottom line is would they want to go through the expense, time, etc of starting one of these lines up from scratch or just buying a grading company outright.
I thought for awhile a few months back they were headed in this direction but they seemed to have lost steam with the idea.
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<< <i>I think wax wrappers is the next logical items to start grading. Slab would be big but to get some wrappers slab bed for display would look good. >>
While I'm sure there are some hardcore collectors for such a service, I would seriously have to question if there is anything close to a broad enough demand for any company, let alone PSA, to engage in that service. >>
CU said that about packs in '04.
Always looking for Topps Salesman Samples, pre '51 unopened packs, E90-2, E91a, N690 Kalamazoo Bats, and T204 Square Frame Ramly's
<< <i>
<< <i>CU is very clearly the best of the best in coins and cards. They do a lot right and provide a quality service. However, complacency in those areas could backfire. As good as they are, there are many areas that could use some improvement. I think the biggest trap successful companies can fall into is over expanding or trying to do too much, rather than continuing to improve and not being satisfied with their place in the market. I think pumping those profits back into what they are already doing would be a win for everyone. >>
Good Assessment, but is expanding into other areas of grading(an area they are already in) really over extending their place in the market ? >>
Not necessarily, but it would be tying up money in a new area when I think it would be better served in coins and cards. i actually have zero clue how coin collectors experiences are, but with PSA I think they can improve on a lot of stuff. They need to be ready when the next round of scammers figures out a way to tamper their current and newest tamper proof case. They should always be looking at that. Their system of who gets their grade results when is very confusing and it is not uncommon for submissions to be popped much later than when their order form is committed for. I think they might also benefit from another senior grader just because they seem to be so busy and have their seniors pretty inundated.
TheClockworkAngelCollection
PCGS expanded into Europe and Asia the last few years. It is growing faster than the US but they have lost in aggregate over $3M since opening these businesses. Asia is now getting into currency and is grading it. If you remember, CLCT had a PCGS Currency division. That was sold off for almost nothing and still uses the PCGS name by paying CLCT $50K/yr to do so.
Before expanding into anything else, they need to get the foreign operations to at least break even. Any more new money losing initiatives will put the dividend at risk. Starting a new business would cost between $1M-$2M. The last time the dividend was eliminated, the stock sank all the way to $2.