WTEC Research Note

Warrantech (WTEC)
By: Richard W. West, CFA

WARRANTECH ANNOUNCES PRELIMINARY RESULTS FOR FIRST QUARTER ENDED 6/30/02

STRONG BUY RECOMMENDATION REITERATED

Warrantech Corporation announced on August 1, 2002, that the preliminary results for the first quarter FY3/31/03 have seen its growth continue, with the ninth quarter in a row (Q1) expected to show EPS in the range or $0.04 to $0.06. Our estimate for the first quarter of FY3/31/03 is EPS of $0.05. A 19% growth in revenues from new and existing clients and recently introduced new products, along with the Company's lower cost infrastructure, contributed to these results.

SUMMARY AND CONCLUSION:

Warrantech continues to report positive growth in earnings and revenues. For the year we are estimating EPS of $0.29. We believe that the fact that Warrantech trades on the Bulletin Board and the recent general stock market instability accounts for the relative flat stock performance. We continue to believe Warrantech is a compelling buy for near and long term capital gains. At its present prices, the stock sells for a price/earnings ratio of 2.3 based on our conservative estimate for this fiscal year. When the Company files its 10Q for the first quarter we will be reviewing our estimates for this year and presenting estimates for FY3/31/04. The STRONG SPECULATIVE BUY recommendation is reiterated. Our price target of $1.75 may well turn out to be conservative. It is our firm opinion that investors who purchase Warrantech Corporation are purchasing a stock in a Company that is on a strong growth track and affords investors minimum downside risk and major upside rewards.

J.M. Dutton & Associates, LLC. John M. Dutton, President and Supervisory Analyst, 1129 Manning Drive, Suite 310, El Dorado Hills, CA 95762 Phone (916) 941-4985, Fax (978) 418-6422 Email: [email protected] Web site: www.JMDutton.com

Information, opinions or recommendations contained in this research note are submitted solely for advisory and information purposes. The information used and statements of fact made have been obtained from sources considered reliable but we neither guarantee nor represent the completeness or accuracy. Such information and the opinions expressed are subject to change without notice. This research note is not intended as an offering or a solicitation of an offer to buy or sell the securities mentioned or discussed. Neither the Firm, its principals, nor the assigned analysts own or trade shares of any company covered. The Firm does not accept any equity compensation. Anyone may enroll a company for research coverage, which costs US $25,000 prepaid for one-year. Reports are performed on behalf of the public, and are not a service to any company. The analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests and insure independence. Please read full disclosure and other reports and notes on the Company at www.JMDutton.com.