Flodyie, you keep on missing the point on the number of shares...
It really does not matter whether there are 5.4 or 10 Millions, since I have done the analysis on the basis of the larger number and we still end up with a valuation of somewhere between $9.00 and $18.00.
Extract from analysis:
Message 8441673
Forward revenue for 1999 (rounded): $12 Millions
Net earnings after tax: 30% x 12 millions = 3.6 Millions
Outstanding shares confirmed by d'Amaro: 10 Millions
Anticipated net EPS: 3.6 Mil. divided by 10 Mil. = 36 cents/share
What is a fair PE for this "Computer/Software type of business? I took the example of another small size software Company, Softworks Inc, and looked up the "earning growth" heading in the detailed research available on Yahoo:
biz.yahoo.com
This gives us an average PE of 50.3 for the "Computer/Software" sector, as a whole and 59.4 for Softworks. Thus, to get an idea of the value of SFLK, going forward in 1999, I multiplied the EPS by the rounded PE:
36 cents X 50 = $18.00/share
Obviously, this is a lot more than what the shares are now selling for. Even, if the PE ratio was reduced to, say 25, the share price would still be at $9.00, which is just one Dollar higher than its recent high.
May your sleep remain undisturbed by this post, as I, too, want to go to bed.
Regards, F. Goelo + + +
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