To run some numbers and looking at what PLUG may be able to do. PLUG may do better or worse than these number but I always like to keep the numbers simple for calculation purposes and then have something to compare actual results to.
Assumptions: that they can raise their revenues by 5 million per quarter and raise margins to 50% by an improvement of 5% per quarter. Also assuming that other costs don't significantly change and starting from a base of 25 million in revenues for the past quarter and 25% with a loss of 10 million for the past quarter.
For quarter 3 2015, 30 million in revenues and 30% margins, 7 million dollar loss.
For quarter 4 2015, 35 million in revenues and 35% margins, 3.5 million dollar loss but possible getting close to cash flow positive the last month of the year
For quarter 1 2016, 40 million in revenues and 40% margins, 0.5 million dollar profit
For quarter 2 2016, 45 million in revenues and 45% margins, 5 million dollar profit
For quarter 3 2016, 50 million in revenues and 50% margins, 10 million dollar profit
I don't know if they can get to 50% margins or not. I have not seen any guidance as to what they are expecting margins to top out at. I think a 50 million dollar quarterly revenue may be possible and they should be able to grow past that if some of the revenue expectations are realized.
As for earnings, to simplify for calculation purposes, if they have 200 million shares outstanding, then they would need 2 million dollars in earnings to make 1 cent per share in profit. To make another assumption that quarter 4 of next year will look like quarter 3, then next year PLUG would be looking at almost 26 million in earnings or about 13 cents per share for the year. With that kind of growth, a PE of 30-50 would not be unreasonable for the stock, I would come up with a share price of $4 to $6.50 based on these numbers. If they can continue to grow revenues(there is usually some limitation to margins so I stop at 50%) the earnings can be much better than the 13 cents. At 50% margins with 200 million outstanding shares, then could add a penny of earnings for every 4 million in extra revenue that comes in. That would be an extra 25 cents of earnings per share for every extra 100 million in revenues. Then the fundamentals would definitely support a share price in the double digits.
Now we know that share prices rarely trade on fundamentals alone. If PLUG can come anywhere close to these numbers over the next 2 or 3 quarters, the sentiment, I am guessing, would be very positive and we should be able to see double digit share prices.
Just the quick and dirty numbers I ran this morning based on the information and guesses I put together. Any comments, corrections, criticisms are welcome.
AI
