How we will get to .205 EPS(IMO)
DFXI just gave us some important insight to our type of business and the profit margins associated with it.
stocksheet.com
DFXI currently trades at $35 with most (80%+)of its business coming from the BowFlex machines
After reading through some of their qtrly reports, I was able to get a better handle on the type of profit margins we could expect and also some of the expenses associated with our type of business. Ex. Production costs for infomercials can range from
$150,000 to $500,000 (from DFXI 10K)
Everyone must understand that there are 2 different types of profit
-Gross Profit - which is the your selling price minus what it cost to make the product
-Net Profit - which is the final $ profit after all expenses including salaries, advertising, R&D, etc is taken out
DFXI I think is a fair model to be using.
Their Gross Profit was always in the high 70% range.
Lately they purchased the Nautalis company (which had a 40.5% Gross Profit) so now their gross profit is in the low 70% range
what does that mean for us
If our gross profit was 75% , we would have a gross profit of $300 for every body rocker we sold at 399.99
but the NET Profit is the real figure we should be concerned with.
DFXI's Net Profit has ranged from 17.3 - 23.5% of sales
(and there was a 4 million $ lawsuit payment in there at one point)
Why did the profit % jump from the 70% range to the low 20% range, that's because all the expenses for producing the infomercials to paying for tv and other advertising spots, and paying all the mgmt salaries etc,etc,etc
So if you agree that it's fair to use 20% as an estimated Net Profit margin, then read on ......
Torso Tiger
800K-1 mil/week in revenues
using the lower # of 800,000 per WEEK, that would give us a yearly revenue of 41,600,000 JUST for the TT
If out Net Profit is 20%, that would be
$8,320,000
So what does that mean ?????
Well that's OUR profit
But we have to divide it evenly among all those who own the stock, so we will divide it by the # of total shares that are on the market (this is what EPS is - Earnings Per Share)
There will be 36 million shares...
'With this and other deals, we are basing our projections on having 36 million shares outstanding at the end of this fiscal year'
biz.yahoo.com
8,320,000 / 36 million shares = .2311 EPS !!!!
so when IFTP said they were safely predicting an EPS of .205, it seems as if they should easily achieve that
Now for further explaination of p/e
That's the Price of a stock per the Earnings (EPS)
DFXI P/E is currently 18.07
if IFTP P/E was 18.07 and EPS was .205 we would have a price of $3.70
but a company's P/E is also based on the perceived potential of the comany. Since IFTP is a start-up company and DFXI has been around for years, I think IFTP would have a much higher potential than DFXI
My guess would be that a 30 P/E ratio would be fair
(take a look at some other p/e's of companies and that could help you determine whatever p/e you find appropriate. Plus it in the equation, and ba ## BOOM)
So, the more I look , the more evidence I find that it really looks like we will see .205 EPS and
I leave you with my favorite equation....
.205 EPS x 30 p/e = $6.15/ SHARE !!!!!
Good Luck & Go IFTP |
