Alternet Systems Inc (ALYI)

[lesgetrich]

You've got the math backward...

Earnings Per Share (EPS) = Profit / Avg Outstanding Shares (OS)

If we assume that their $1.5 million in contracts has a 20% profit margin...

$1,500,000 x .20 = $300,000 profit (aka earnings)

$300,000 earnings / 218,690,001 Outstanding Shares = $.0014 EPS

A common figure used to measure stock valuations is what's called the Price/Earnings (PE) Ratio. It's the ratio of a stock's current price per share (pps) over its earnings per share. The Stern School of Business in New York University publishes a measure of PE ratios across different industry sectors...

PE Ratio by Sector

Depending on which sector you determine ALYI falls in you could see different results but since the company is essentially a startup it should experience some very high growth over the next several years. The average PE across all sectors, excluding financials is 72.96. Multiplying the EPS by this number yields...

$.0014 EPS x 72.96 PE = $.10 /Share PPS

This should not be taken as a prediction. It only tells us that $.10/share is a reasonable price for this stock given what we expect for revenue and profit. It could go somewhat higher or fall a bit short and still be rational. However, someone suggested $1.20/share. If we hit that, the PE ratio, given what we currently know, would be...

$1.20 pps / $.0014 pps = 857 PE

This would be irrational given the current revenue projections. We would have to see additional contracts and a much higher revenue projection for this to be a serious target.

Hope that helps.