Labor Smart Inc (LTNC)

[sobe4life]

Terrible comparison.....

WOW! really so I guess if I open a car dealership and I sell enough to have a million dollars in sales it doesn't matter that my costs to sell those million dollars was 1.5 million doesn't matter. Lets just worry about gross profit.

First, I am not sure how a comparison can be made comparing a one store operation (car dealership) that sells a tangible item to the end user retailer and whose profit center is actually in selling parts and in the servicing of vehicles, to a multi-branch operation that is in the middle of showing consistent triple digit growth and is in the service industry.

Key word here is the word GROWTH.

Bottom line is that growth costs money. The idea is to accumulate critical mass and let the branches mature. As this occurs, we shall (and already have) see gross profit margins rise as the company can afford to "weed out" high revenue, low profit business for low revenue, high profit business. At some point in the near future, the income derived from the mature branches will outpace the expenses of the growth. When this starts to occur, we will see (and already have), the company start to show positive EBITDA which should eventually flow into positive net income for the company.

Initially for a start-up operation, growth needs to be very aggressive in order to build a foundation. This normally takes several years. But when successful, the business matrix will naturally turn the corner of profitability. Management is also key to this process and the fact that Labor SMART has competent management that is proven in this industry is a HUGE plus.

Bottom line, this is a public company. If it were privately held, the CEO could simply STOP growing right now and would immediately start showing net income, once he stops funding and fueling growth. However, the company has made it very clear since its inception, that it intends on becoming a $100+ million dollar company by 2017. With those revenues will come a net income that should be MUCH GREATER shareholder value to the company.

I know I speak in plain english, so it is obvious that my previous post discussing GPM's and EBITDA, as it relates to Labor SMART's growth, are either not understood or have gone unread.

There are many great books that explain business 101 and how to comprehend how start-up companies operate if basic business concepts cannot be understood.

Also, a good education at a Business Management school certainly never hurts.

As for the stock dropping to 17 cents a share?

That is the definition of an undervalued stock under current market conditions. In investing there is something called the Contrarion Theory. That is an investment philosophy that says never move with the "herd mentality" and always accumulate when no one seems interested in a situation.

I think LTNC is the perfect situation to apply this theory.

JMHO