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Gold/Mining/Energy : American Eco (ECGOF, ECX on Toronto exchange)
ECX 1.855-1.3%Jan 15 3:59 PM EST
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To: Harry_Behemoth who wrote (1788)2/28/1998 12:00:00 PM
From: david james  Read Replies (2) of 2841
 
As was mentioned before, because of the losses that DBCO has incurred over the last few years, Eco should inherit a fair amount of NOLs in the acquisition. I think it is worth considering what this will do to Eco's earnings in 98, even if DBCO only breaks even. The current estimates for Eco in 1998 are around $1.40 fully taxed. I've been told that those estimates are based on the assumption of a 35% tax rate. So before taxes, Eco is expected to make approximately $2.10. I do not know if the inherited NOLs will be enough to offset all of Eco's taxes, but if they were enough to offset even half of the taxes, then we should expect Eco's estimates in 98 to rise to the area of $1.75 after the acquisition even if DBCO just breaks even. If DBCO becomes profitable or if the NOLs are of a higher amount, then those estimates should rise.

With earnings of $1.75, Eco would be trading at 98 P/E of 6.4.
With earnings of $2.10, Eco would be trading at a 98 P/E of 5.3.
David
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