FRANKLIN TELECOM (FTEL) Message Board

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Microcap & Penny Stocks : FRANKLIN TELECOM (FTEL)

FTEL 0.770

+8.3%

12:53 PM EST

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To: elk who wrote (22661)	12/6/1997 12:29:00 AM
From: David McCleary	Read Replies (6) of 41046

Evan, excuse me if this is an obvious question, but aren't you confusing gross profit with net earnings? Is this that new kind of math? <ggg> And if your correct about a 75% profit margin that scares me to death. With profit margins that high the door is wide open for competition to enter with a feeding frenzy. Let's assume kindly that FTEL receives 40M revenue next year. With a profit margin of a more likely 20%, but I'll use 70% for humor purposes, we have a GROSS profit of 28M. Nice scenario, unfortunatly FTEL has bills to pay. Earnings are generally 15% of gross profit making 1998 net income 4.2M. Keep in mind this assumes a profit margin of 70% which is highly unlikely. 4.2M earnings spread across 18M shares gives $0.23 per share earnings, not your $1.00. But still, not too shabby a trend of earnings growth relative to previous years. With an average P/E of this industry being 25, that gives us a share price of $5.75 at the end of next year. Even with that it is still a 31% price appreciation in one year (using your numbers of 40M in revenue and 70% profit margin). If you follow TA and we see the opportnity to buy at $3.50, that means a 61% price increase! Dave

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