I've never thought in terms of risk premiums vs fixed (I don't think fixed) so I won't touch that question since I can't do it justice.
What is a reasonible multiple - I would say 20. Based on its supurb FA, where it trades relative to its normal ranges (P/Sales, cash flow, PE) The disconnect between margins, ROA, ROA & DE vs P/book & P/Sales
should close with a couple good qtrs, their products, their very good cost structure, 38% 5 year EPS growth, good % of qtrs with upward EPS surprises, Their cash & current ratio.
The downside, a small company with a limited # of customers is vulnerable to one customer delaying or scaling back orders can wreak
havok short term (not just EQNX, had it happen with PTIX and SBEI)
If EQNX was 3-4 times bigger, it would get better multiples and smoother qtrs. Scott |
