Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (5) | Ignore Thread Prev | Next
Author: anthonyms Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 1586  
Subject: Re: .......AND IT KEEPS GOING! Date: 3/29/2011 11:54 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 1
Actually to play around with the numbers a little in a very very simplistic fashion:

At 2bn mkt cap this would have to be justified by some serious earnings expectations.

Taking some very basic assumptions...
Hi growth tech stocks would tend to operate around the
25-35 p/e ratios
At best possess a 50% Op Inc margin but more likely 25% at early lifecyclye stages

So far although the top line has tripled over the last 3 years to 30m the bottom line has not budged - we lose 19-20m every year.

To justify a 2bn price tag I would think PANL has to deliver earnings of 57-80m (on a 25-35 p/e ratio).

At a 50% margin (which I think hardly possible) this would be at least revenues of:
$114m (35 p/e ratio) to $160m at (25 p/e ratio). So sales need to triple or quadruple.

At a more realistic 25% margin then this would require revenues of:
$228m (35 p/e ratio) to $320m (25 p/e ratio). Meaning sales need to increase 8-10 fold. This also seems to fit with a more typical 6-8 price to sales (currently at 80+).

As I mentioned previously forward p/e is at 52 which just cannot be true implying they will earn $40m this year which doesn't correlate with the analyst expectations of 1 cent per share earnings nor reality.

I think I might be looking to move to the sidelines at some point soon whilst reality catches up (by up to 10x) or valuations correct (I don't want to think about that). Otherwise acquisition premium might be the only supporting factor here but that isn't something I have heard of too much connected with PANL.

There are other investments that have as strong a relative strength profile (SFSF; ARMH; CHKP; EMC; CEVA; WFMI) with more realistic fundamentals as well as attractive value plays within tech sector (CREE; AUDC; NTAP; TIBX; ALTR).

I have no idea how to target an exit price though now we are into clear blue sky share price territory.
a
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (5) | Ignore Thread Prev | Next

Announcements

Foolanthropy 2014!
By working with young, first-time moms, Nurse-Family Partnership is able to truly change lives – for generations to come.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Dividend Growth Investing

Good Time for Dividend Champions?
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement