ANALYSIS OF GEEK! P/E of 91.7
Here are some numbers I calculated for GEEK. They're a steal at their current price.
Current Price: 14 7/8 (Dec 11th, 1998)
Shares Outstanding: 6,285,957 shares (2,300,000 are now float)
Market Cap: $93.5 million
Revenues (ttm): $10.31 million
Operating Expenses: $ 9.81 million
Earnings(ttm): $ 1.02 million
Earnings (per share): 16 cents
Price/Sales Ratio: 9.07
Price/Earnings Ratio: 91.7
This company is profitable with a P/E ratio of 91.7. It has a P/S ratio of 9.07. The successful, big-name ISPs like MSPG and AOL have P/E ratio around 250 to 300 and a P/S ratio of 15 to 20 and market caps into the billions. Other notable ISPs like ELNK, PSIX, and VRIO are losing cash faster than water. For example, VRIO lost $98 million ttm; ELNK lost $32.2 million ttm; and PSIX lost a mind-boggling $144.4 million last year.
I believe GEEK's modest earnings will continue to increase in the coming quarters after this IPO because now they can use the money to pay off the loans and wipe out the interest expenses that's been a burden on their earnings. For the last twelve months, the company had to pay $512,000 in interest expenses. That number should now contribute positively into the company's earnings after the IPO. If we neglect the interest expenses for ttm, we get an earnings of $1.53 million (ttm) and a P/E ratio of about 41. Now that spells VALUE! Also, they now have more capital to work with. As stated in their SEC filing, they're more interested in building a profitable business FIRST before expanding into larger markets. I believe they now have the capital and resources they need to incrementally expand into a large, profitable business (through acquisitions, building internet infrastructure, etc). GEEK has a bright future in the growing ISP market.
Feedback welcome. Good luck all.
-Ken |
