What would it take to get the PPS to $5?
If they successfully manufacture the 3D cell, and it lives up to its power output, then wont that be the standard in the industry for some time? i think so. And that would mean a lot of 3D cells manufactured.
I have no idea what the margins will look like when they manufacture the cell. if they produce a lot of cells and NET about 60 million, then we can play with the numbers and get:
P/E ratio: (price/(net income/outstanding shares)
5 for the current price
60 for the NET income
500 for the outstanding shares, which I'm being very conservative with here, so I rounded it way up
60/500=.12 (earnings per share)
so 5/.12
If the PPS is valued at 5 dollars and they are bringing in 60 million in NET, and they have 500 million outstanding shares, then the PE would be 41 times earnings
You would have to get an average PE for the industry, to determine a fair PE ratio, but 40 is a very real possibility considering Solar City is or was around 70 times earnings. The PE can fluctuate a great deal, so there could be a time when S3D gets a lot of publicity, and the PE goes through the roof for a period of time.
at 60 million in NET, they could be priced at 5 dollars. if they bring in 120 million it could be priced at 10 dollars. etc.
with installations alone, the margins are somewhere around 10% if we use the last quarterly as an indication:
"The quarterly report contains SUNworks’ second quarter sales of $7.5 million representing an increase of over 600% compared to Q1 2014, resulting in operating profits for the quarter in excess of $762,000."
.762/7.5
so the revenue would have to be pretty big to get us past $5. but over time, with acquisitions and/or large deals for SUNworks, that could be a possibility. If they bring in 600 million in revenue, at 10% profit margins, then we could reach that 60 million in NET income (not really, it's operating profits but thats close enough for this rough hypothetical). that would mean bringing in 150 million in revenue per quarter.
If you increase profit margins, raise the P/E ratio, or lower the outstanding shares then the revenue needed would be even less.
someone correct me if my math is wrong :)
The cool thing is S3D should have significant revenue from both the 3D cell and SUNworks. so there are a lot of combinations that could play out to get to that level of income.
what will be really interesting, is to find out what the income generated for the 3D cell will look like with the initial partner. how much they'll get per cell? and how many cells will be produced?
