3rd of 3. An attempt at calculating revenue, earnings and share price.
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Subject: Revised Projection
Date: Sat, May 2, 1998 01:46 EDT
From: RUPEH
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All calculations are for fiscal year 6/98 through 6/99
I went back and read the last qtrs earnings report and the transcript from the conference call. I found a few things that cause me to lower my estimates. 1) Total number of engineers that are likely to be on staff - lowered from 600 to 500
2) Margin on invoiced hours - using 35% (between my estimate and TomorrowCast's estimate) 3) Total number of shares outstanding - raised from 20,250,000 to 25,000,000.
500 Eng x 40 Hrs/Week x .80 (utilization factor) x 52 Weeks x 160 $/Hr = $133,120,000 Revenue per year
At 35% margin the Earnings will equal 0.35 x 133.1 mm = $46,592,000 = $1.86 per share x PE of 20 = share price of 37.
On the subject of CD sales. Wonderware ordered 30,000 CDs for the first batch. The revenue to TAVA is around $5000.00 per CD (simplification of a complex sales process). If they only sold 1/2 of the CDs they would bring in $75,000,000.00 in revenue. What's the margin on that? The CDs have been developed and manufactured already. Further assistance on the part of TAVA is billable. Let's go with 50%. Another $37,500,000 in earnings. Around $1.8 per
share x a PE of 20 = an increase in share price of 36 pts?
37 + 36 = 73 bucks a share
Oversimplified? yes. A rough gauge of the potential share price? maybe. Increasing my bullish sentiment on TAVA? yes.
Keep commenting. Good luck talking me down to 13 per share.
Dave |
