For the 9 months ending Sept 96 they had a EPS of .18 VS a -(0.56 ) for 95.
Most of that .18 EPS came in the Third Quarter.
Third Quarter EPS was .14
Therefor, the company must have really started turning things around in the First and Second Quarters of 96 and MUCH more so in the Third Quarter of 96.
Once again, remember, that the Fourth and First Quarters are ussualy their best quarters for their Cold and flu Medicine. MAJOR part of their business!
If the majority of their EPS was in the Third Quarter, what will there BIG Fourth Quarter be like?
And the First Quarter of 97 ?
Taking your P/E of 22.6 X .18 EPS (First three quarters of 96)
= $4.068
Lets assume they can ONLY equal there third quarter EPS of .14 EPS, even though Fourh quarter should be better then their third.
.18 ( 3 quarters ) x .14 ( Fourth quarter ) = .32 EPS
.32 x 22.6 PE = $7.23
Lets play conservative:
Instead of industry standard of 22.6, lets use a PE of 10.
I pick 10 because their PE should be much better after a annual report showing month after months improvements. Return to profitblity.
Major Debt. reduction, Bio's are doing pretty good now, Increased sales, etc..
Lets say they dont do quite as good as Third quarter ( not likely ).
Lets give them a EPS of .30
PE 10 x .30 EPS for the year = $3.00
Thats more then double the current price!
Well , I have been long winded enough and very sleepy.
Oh! one other point! You mentioned their yearly high not passing $2.00 a share. Look how bad of shape the company was in for all of 95.
Even the first two quarters of 96, though NO WERE as bad as 95, were not all that great.
It was the Third quarter that really turned things around.
Two quarters ok, fair, so so does not empress anyone much after all their big losess in 95.
One great quarter makes people take some notice.
Two good/great quarters and going into another quarter which should be good, should and I beleave will, make many people beleave that the company has indeed turned the corner and has a record of doing it.
In my VERY sleepy state I hope this very long winded letter makes some sence.
Later |
