Market cap $262 M, enterprise value $380 M
These are huge numbers.
The market cap is $262 M.
Long term debt + preferred stock is $118 M.
Adding them together gives an enterprise value of a whopping $380 M.
If warrants are exercised, this enterprise value will soar even higher.
Is there anybody who thinks this company's prospects and technology are really worth $380 M?
BTW, R&D is $830 k in the latest quarter. Tiny.
In the 5 years from 1994 - 1998, total R&D expenditures were $19.9 M. That works out to $4 M per year.
Now look at the enterprise value. It is equivalent to a humongous 95 years of R&D expenditures.
Anybody buying the stock based on the idea that the technology is valuable, should ask themselves if it is worth 95 X the annual R&D expenditures. That multiple is very, very high for a technology company.
Let's look at this another way:
Michael Murphy, the editor of that technology newsletter, has his own multiple for evaluating development-stage R&D companies. He takes the last 5 years of R&D, and divides that into the market cap (or in this case, the enterprise value). SRCM is trading at a multiple of 20X 5-year-R&D expenditures, which is very high compared to other development-stage-companies.
It might take a while for this stock to find its true value. Maybe there won't even be a catalyst until they have to start making payments on the LT debt. |
