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Microcap & Penny Stocks : ACRT about to move to new highs -- Ignore unavailable to you. Want to Upgrade?

To: Doug R who wrote (3367)	3/15/1998 5:03:00 PM
From: Mr. Pink	Read Replies (2) \| Respond to of 7054

here is a repost of Mr. pink's approach to the valuation. This is the case if ACRT were a squeeky clean company, which it is not since virtually every member of senior management has either been fired in disgrace, is a fugitive, an ex-gambling instructor or does bookeeping for seeing eye dogs. A fair approach Mr_Pink_esq Mar 14 1998 9:36PM EST Only a valuation method that values the sexy and dynamic TAD business seperately from the air conditioning vending business is acceptable. If you apply your 3.5% earnings yield model (implying a multiple of 28.57 multiplied by last quarter's $200k TAD earnings annualized (times 4), you get a valuation of $22.9MM for the TAD business. In order to get to a valuation of "25% above current level, you would get an enterprise value of $142MM thus you would have to value the air conditioner business which generates some $4MM pretax a year at $119MM or 30X EBIT. It is more like a 7X EBIT company at most and probably closer to 5X. So even by your own logic ACRT is worth $$47MM or about $5.80 per share. Mr. Pink would be interested to know why you think the air conditioning business should get a premium multiple if you disagree with the above. Best regards, Mr. Pink, esquire and member in good standing of the National Association of Business Appraisers

To: Doug R who wrote (3367)	3/15/1998 5:32:00 PM
From: Andrew Q. Viet	Read Replies (1) \| Respond to of 7054

Simple Math: Zacks published Earnings Growth Rate for ACRT = 75%. Let's assume that ACRT can keep up with this growth rate for 5 years. Let's calculate earnings 5 years from now FE = PE( 1 + EGR/100)^ n FE = future earnings PE = present earnings ( Last 4 Quarters= $.43/share) ERG= Earnings Growth Rate ( 75) n = time frame compounded ( here once a year over a period of 5 years) FE= .43 ( 1 + 75/100)^5 = .43(16.413) = $7.058/share Let's ascribe a P/E of 20 which is very conservative, each share will be traded 5 years from now. P/E = 20 P = 20E = 20*( 7.058) = $141/shares Note: for simplicity potential future share dilutions are not included in the equations.