Below is a fundamental valuation post reflecting the projected valuation of APSI that could manifest into a reality if they truly do close the acquisition of Tradition Transportation Group, Inc. per their PR and 8-K filed with the SEC below:
Before reading any further, understand that this valuation post or any valuation post that I create is not the gospel. Just because the projected valuations within this post are indicated doesn’t mean that the price of APSI is necessarily going to get there. This is simply a ”Valuation Price Projection” of which it is first going to be up to the company to achieve what they are claiming they are going to achieve with such acquisition of the Tradition Transportation Group, Inc. to manifest this valuation projection into a reality. Then it’s going to be up to the market to realize such.
It’s going to be up to the company to reflect the key variables that were stated to exist with the new acquisition to justify the APSI valuation. If any of the variables are different once the acquisition closes and details are announced, then use the ”Substitution Property” to replace any of the variables in the upcoming formulas that are used to derive the valuation of a company. See the key variables below that I will use to derive the valuations:
Key Variables to Note ** Tradition Transportation Group which had consolidated audited financials of over $87 million in revenues for 2021. ** APSI Outstanding Shares (OS) = 17,204,180 shares as of 11/07/2022 ** P/E Ratio for Trucking (Logistics/Transportation) Industry = 39.29 ** Net Profit Margin for NASDAQ:Old Dominion Freight Line Inc = 21.56% a/o 09/30/22 ** 19% Net Profit Margin for Transportation (Logistics) Industry.
Based upon the key variables indicated above, we can now derive a projected valuation for where APSI should fundamentally trade if the company acquires Tradition Transportation Group, Inc. and if the variables above are in place to exist as also indicated above. For whatever variables that are different, use the ”Substitution Property” to substitute out those variables that such apply to. Observe…
Revenues = $87,000,000 Net Profit Margin = 19% P/E Ratio = 39.29 for Trucking (Logistics/Transportation) Industry APSI OS = 17,204,180 shares
Important to note: Since it is believed that Preferred Shares are being used to complete the acquisition, I will presume that the OS will remain constant. There is a chance that some warrants might be issued so it could slightly change. If it changes at any time, apply the Substitution Property accordingly. I suspect any change will not be huge to effect the valuation of the deal coming in.
Revenues x Net Profit Margin = Net Income Net Income ÷ Outstanding Shares (OS) = Earnings Per Share (EPS) Earnings Per Share (EPS) x Price to Earnings (P/E) Ratio = Share Price Valuation
$87,000,000 x .19 = $16,530,000 $16,530,000 ÷ 17,204,180 shares (OS) = .96 EPS .96 EPS x 39.29 P/E Ratio = $37.71 per share
This means that if the variables align as they do above after the completion of the acquisition of Tradition Transportation Group, Inc. by APSI, then it will fundamentally be worth somewhere in the area of $37.71 per share.
For those that like to air on the side of being very conservative, let’s use the ”Substitution Property” and substitute out some variables to presume some more conservative variables. Let’s presume that they still will use preferred shares for the acquisition as some have learned but issue a small amount of shares to increase the OS to be roughly 20,000,000 shares. Let’s consider this different scenario…
Let’s also presume that they will only have a 5% Net Profit Margin instead of 19% and let’s use 15 instead of 39.29 as the P/E Ratio. Observe…
$87,000,000 x .05 = $4,350,000 $4,350,000 ÷ 20,000,000 shares (OS) = .2175 EPS .2175 EPS x 15 P/E Ratio = $3.26 per share
I believe that the deal will close sometime in the near future. After doing further DD, I truly believe that the ”Key Variables” are fairly close to what investors should expect after the consummation of the deal. Again, the purpose of this valuation post is to show where APSI should fundamentally trade if they achieve what they are claiming to achieve. If they don’t, then don’t expect this valuation post to manifest into a reality. Also, if they achieve something smaller or greater than what they have claimed to do, then use the “Substitution Property” accordingly to substitute out any variables in need of such.
I am in and have seen around the market quite a few stocks that have not been living up to expectations. I truly do believe that APSI will meet or exceed market expectations with the closing of their acquisition of Tradition Transportation Group, Inc. I am actually expecting for the revenues to exceed expectations because the $87 Million was generated 2021 during distressed times when COVID-19 was at its worst. Hopefully this post helps one to understand the potential that exists here in APSI if this acquisition closes.
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