P10 Industries Inc. (PX)

[Tim Eriksen]

Another factor in valuation

The upside in P10 is huge.

If ebitda can be increased by $1 million annually and it is valued at 10x that adds $10 million to enterprise value. Since debt does not change that means the increase is attributable to the equity. $10 million of value is $0.11 per share.

The other cool thing is time. Let's assume in the June quarter they have $7 million of ebitda and $5 million of free cash flow. The $5 million is attributable solely to the equity, which is $0.05 to $0.06 per share every quarter.

So we have a $1.40 stock that even if everything stays the same, the share price should theoretically increase $0.20 to $0.25 per share in twelve months.

Putting the two together. It is not unrealistic to think ebitda ends the year at $30 million run rate, which means $0.20 to $0.22 per share increase in valuation, plus the three quarters of earnings ($0.15 to $0.18) means a total of $0.35 to $0.40 per share in possible gain.