Frank Ching, perhaps you missed my brimming with factual goodness post yesterday on RB about ZSUN's valuation. I'll report it here in a less cluttered with crap, enviroment so that you may more easily view it and comment on it with your keen mind and great market wisdom.
"Meatloaf:
You are assuming 100% growth for ZIASUN for the next two years. Based on what?
It's one thing to double a small number, but how are you going to double a much larger one? Even OIA wasn't figuring on a double. In a PR they stated that average workshop attendance was 37 during 99 and was running 54, during the first part of this year, a 46% increase, and ahead nicely of their goal of 45 people, which would only be a 25% increase. Now of course they could also add more workshops, but can they really add that many more. Also keep in mind these rosy numbers were put out during the first quarter when the market was running wild. Now after the correction it's very logical to assume that the number of people attending these workshops is lower, or that more advertising dollar per person would need to be spent(lower margins). You are calling for 100% growth for the next two years, but to me OIA growth is largely predicated on the overall market and this weeks meltup aside, it's not likely to do anything like 99 ever again.
Let's assume you are correct and that ZSUN does 60 million in revenue this year. So what? That's less than 50 cents a share, meaning ZSUN would be trading at 14 times forward sales right now. You also have profit to consider, Frisky calculated that they made 6 cents a share in Q1, if you use the full number of shares outstanding after paying off the OIA guys. You have 8 cents a share/quarter of goodwill starting in Q2, so you have to make 24 cents/share or $7.7mm in profit, just to get to even. If they double the Q1 number, and make 12 cents/quarter the rest of the year, that would be 42 cents total(6+12+12+12) knock off the 24, leaves you with 16 cents/share in earnings, which would give them a P/E today of 45. That's if they can grow like gangbusters, in a sideways to bear market, which is doubtful.
So why should the company be worth 10 much less 20 when it's selling today at 45 times a very rosy future earnings forecast?"
Care to comment Mr. Ching?
CMB |
