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Eric, while it looks on the surface as if the royalties are carrying the rest of the company, that conclusion assumes that royalties carry no expenses in themselves. It doesn't make much sense to me to attribute research, development, administrative, and other core expenses solely to the manufacture and sale of products. At least SOME of that should correctly be attributed to royalties. As for the P/E, that's not the only measurement worth looking at in a fast growing company whose products are just beginning to reach various markets. Look at revenue growth rates, price to sales ratios, and above all, market price to book value, comparing those stats with other fast growing companies. Also look at the amount of cash on hand, comparing it with other companies, and you'll see why other companies, when they get strapped for cash, frequently issue new shares. SNDK doesn't have to, and that is one mark for sound management. Taking all these factors into consideration, the stock to me doesn't seem overpriced at all. |
