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Gold/Mining/Energy : GTR GROUP INC. (formerly Games Trader) TSE:GTR, AMEX:GIG
GIG 10.580.0%11:44 AM EST
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To: Ruby who wrote (244)4/26/2000 4:58:00 PM
From: Professor Dotcomm   of 290
 
I find it hard to believe that the CEO quoted you earnings for the last quarter in the high twenties. He was probably referring to the year since analysts are quoting around or a bit below these numbers.

But this is not the main point. When a company issues sackfuls of shares for acquisitions, the eps are misleading until the resultant growth becomes visible.(True, if you issue debt, it becomes visible pretty soon afterwards). No, in my opinion, the key to understanding GTR is tracking the trailing net profits of four quarters. Then you have a gradient and the slope of this gradient will eventually determine the right kind of p/e. Obviously, a faster growing company should emerge with a higher p/e.

In GTR's case, in my own opinion, a p/e based on even weighted average shares outstanding will probably come in at around 20 -25 times fully taxed fully diluted earnings. I believe even a 75 times multiple based on last year with only 6 months of Mad Catz and zip from ZapYou.com, would not be over pricing the stock.

The trouble is, will it be able to sustain its FY99 growth gradient? The key, I think, will be next Christmas's run rate on their e-business. For this they will need a further half dozen or so US web sites under management.
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