Southcorp Capital Inc (STHC)

[cjstocksup]

This is also why STHC could see dollars ahead We have a low float lower than the OS, no dilution and the company is worth way more than any of us thought as far as this initial DD below.

This means that to derive a fundamental valuation for which STHC should trade within the Metals & Mining Industry, we would need to multiply its EPS by the Price to Earnings (P/E) Ratio for the Metals & Mining Industry to get below:

.0514 EPS x 36.92 PE Ratio = $1.89 per share valuation for STHC

Some might want to go a little conservative to air on the side of caution and consider 15 for a conservative PE Ratio then observe below:

.0514 EPS x 15 Conservative PE Ratio = .771 per share valuation for STHC

With the logic that you posted, you are basically using a PE Ratio of 1 to get your value of .05+ per share of which assumes that there is absolutely no growth within the Metals & Mining Industry which is absolutely not the case. The 36.92 number that is used for the PE Ratio was created from 92 companies that are "profitable" companies within the Metals & Mining Industry as provided within the link above. So, it's actually fair to use 36.92 for the PE Ratio as there is evident growth since so many companies within the Industry are profitable.

This means that STHC should grow at a rate that is the norm for the stocks within its Industry of which it exists based on the positive factors for growth that currently exists.

For those new for understanding what a P/E Ratio is and key dynamics as it is referred to being the growth rate for a stock as it exists within its particular Industry, read the links below that hopefully will help one to see how it's used to assess the fundamental valuation of a stock:
investorshub.advfn.com/boards/read_msg.aspx?message_id=57154170
http://www.investopedia.com/terms/p/price-earningsratio.asp

To further articulate what I explained above, look at many of the major market stocks such as MSFT, CSCO, QCOM, AAPL, etc. Look at their Earnings Announcements and see how low their EPS is compared to the dollars per share price that those stocks are trading. They trade much higher than their EPS because the market takes into consideration their growth rate for their Industry or their PE Ratio for which they exist. Hopefully this helps more investors to see how such works.

v/r
Sterling