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Re: LaFortuna post# 14126

Wednesday, 11/18/2015 3:45:34 PM

Wednesday, November 18, 2015 3:45:34 PM

Post# of 30670
Hmm.. how does one determine valuation. Lots of ways.. but lets use PSR ( PRICE TO SALES)
Here is some info. you can read it. if you care to.

http://www.fool.com/investing/beginning/how-to-value-stocks-valuation-methods-revenue-base.aspx

Whether or not a company has made money in the previous year, there is always revenue -- even companies that may be losing money temporarily and have earnings depressed due to short-term circumstances, such as product development or higher taxes. Companies that are relatively new in a high-growth industry are often valued off of their revenue and not their earnings. Revenue-based valuations are assessed using the price/sales ratio, or PSR.
The price/sales ratio takes the current market capitalization of a company and divides it by the past 12 months trailing revenue
Market Capitalization = (Shares Outstanding x Current Share Price) + Current Long-term Debt

So for GNPT estimate of PSR is ((200mil shares X .0022) + 5mil) / 12mil in rev = .45

the lower the PSR, the better. Ken Fisher, who is most famous for using the PSR to value stocks, looks for companies with PSRs below 1.0 to find value stocks that the market might be overlooking. This is the most common application of the PSR and is a pretty good indicator of value, according to the work that James O'Shaughnessey has done with S&P's CompuStat database.

The PSR is also a valuable tool to use when a company has not made money in the past year. Unless the corporation is going out of business, the PSR can tell you whether or not the concern's sales are being valued at a discount to its peers.

If XYZ Corp. lost money in the past year, but has a PSR of 0.50 when many companies in the same industry have PSRs of 2.0 or higher, you can assume that, if it can turn itself around and start making money again, it will have a substantial upside as it increases that PSR to be more in line with its peers'.

So what price would we be at to get a PSR of 1?? assuming that is the bench mark ? lets see

((200 mil shares X ???) + 5 mil)/12 mill = 1 solve and ??? share price would be at 0.035


This is just one of may ways to value a company but you get the point



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