Grouse Hunter, to answer your HCPC issues…
With all due respect, that was a very wise observation, but let me explain why I had derived the EPS figure the way I did. I did that valuation post as such because of how it’s a little different here with the concept that HCPC is deriving Income. It is understood that the net amount of Income would be derived to be the 5% origination fee.
The company plans to use 35% of that 5% origination fee to buy back stock to retire shares back to the Treasury. The remaining 65% of that 5% origination fee is to be used towards Expenses.
From previous research, I understand the basic formulas below to derive an EPS:
Revenues – Expenses = Income (or Profit)
Income ÷ Outstanding Shares (OS) = Earnings Per Share (EPS)
Given the way in which how funds will be earned and used, it called for us to skip the first piece in the above formula since Income was already derived and go straight to the next fundamental phase of derivation for determining the EPS below:
Income ÷ OS = EPS
I do understand how you are viewing things though. As far as capturing Expenses on the Income Statement for filings, I think such could be deducted from the bulk amount origination fee as more will be available to cover such. That is also why I had derived the first portion of that post to reflect the .0011 per share bottom in where we should be fundamentally sitting at right now.
HCPC has been very transparent even when it was not what shareholders wanted to see to stick with implementing their business plans. From reviewing previous quarterly and annual reports filed by HCPC, their Expenses are well below $1,000,000 per year. I used $1,000,000 as a worse case scenario in previous posts where I reflected Expenses in a different manner considering that many of the legal and processing fees have already been covered from previous DD too.
The buyback of shares will balance the scale of not including $1,000,000 in Expenses to the favor of us shareholders greatly from when I went back and did the math. That also made me see it fit to not include it the way I did in previous posts. Also, the $1,000,000 in Expenses would be more than captured in the 65% that remains from the 5% origination fee from further bulk amounts of closings to where actually I could logically justified increasing Income from such. Explaining either one or both as an option for consideration with that earlier valuation post could have possibly made that post much more difficult for some people to understand without fully understanding the logic of the basic fundamental analysis.
Your query was very fair. I hoped this explains why I did it as such as an easier way for all to understand along with showing how the cost of doing business was factored in for simplicity sake for your average investor. I’m not sure how their accountants will reflect such on their Income Statement, but I feel very confident that the end results will be very similar regardless to what road they take to get the EPS. Expect to see a positive EPS for HCPC if not in this upcoming filings, their next. IMHO
v/r
Sterling
AI
