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Biotech / Medical : Biosource International
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To: Joe Dancy who wrote (624)2/11/1999 11:56:00 PM
From: Night Trader  Read Replies (2) of 696
 
I think it was Michael Murphy who popularized the idea of "growth flow" - that is dividing the market cap not just by earnings but also by R and D as well. R and D that goes into products not seen in the current quarter but that will (hopefully) be money earners in the near future.A ratio of under 10 is considered good and under 5 excellent. With this in mind I spent a few minutes ferreting around SEC documents and came up with annualized R and D of 2.72 million and estimated earnings of 2.8 million for BIOI producing a ratio of 4.0. It's main competitor Techne's "growth flow" was 16.3.

Alternatively, this could just be one of the inefficiencies of being such a small company. Techne still spends almost 4 times as much (absolutely) as BIOI in development, though not all in BIOI's field.
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