"Anybody else want to tell me what Corel fundamentals make me want to buy this stock (other than "it's so low, it can't go any lower...")?"
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A. EARNINGS
Forward earnings is what will drive the stock upwards.
Some current negatives:
At the present level, the stock trades at a P/E ratio of approximately 55. The last six quarters have been disappointing in terms of earnings and Canadian GAAP methods of reporting have made the earnings look worse than they really are.
Some positives (future):
Switch to US GAAP. With the impact of aquistion-related amortization and depreciation charges out of the way, we will see margins go from about 70% to around 80%. Expenses will probably run at around 60% of sales going forward. Under this probable operating envelope, earnings are going to be a lot better than the last six quarters.
Using a conservative sales number of $450M for the last two quarters of 97 and the first two of 98, Gross Profit will be $360M. Expenses will be $270M. This would result in $90M income from operations. Using 35% for income taxes, Net Income would be $58.5M. With 72.4M outstanding shares, earnings will be 0.80 per share.
A conservative P/E multiple of 25 with $0.80/sh would price COSFF at US$20.
B. CASH FLOW
C. BALANCE SHEET
D. OPERATIONS
E. PRODUCTS
I'll try and get into B,C,D,E at some later point.
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