Elite Pharmaceuticals Inc (ELTP)

[NASDAQ2020]

N2K “Since I am always willing to increase shareholder knowledge, I have a DCF algorithm that can be used and I did. So, a little on a DCF...it requires some projections because, after all, the future is uncertain. However, there are certain mathematical assumptions that have to be made to do a DCF because we are trying to project the future...with this caveat...a DCF is used to determine, based on the calculations, what a company is valued at TODAY! As this notes...DCF is...

A valuation method used to estimate the value of an investment based on its ?expected future cash flows. DCF analysis attempts to figure out the value of an investment today, based on projections of how much money it will generate in the future.


Here is a link, if interested in the long-hand math. https://www.investopedia.com/terms/d/dcf.asp

But I have a simpler algorithm. It requires some effort but the independent variables are relatively easy to arrive at. One calculation is from the Quarterly report...earnings per share, which has been 0.01cents. The next three are estimates. So, when looking at Elite's revenues since 2018, we can make certain estimates of growth. 2019-2020 was 240% and that is wildly high and not useful in itself. However, 2020-2021 saw revenues increase 41% and 2021-2022 the increase was 28%. While Elite has products under development, they do not count for a DCF (and neither do assets like the building). All we can do for DCF is estimate future revenue growth and I used 25% (less than the last two years) and suggested it would be at that rate for conservatively estimated 3 years, then tail off to 8%, which is roughly a combination of inflation and increasing category growth for CNS drugs. All that is pretty conservative. The next independent variable is actually suggested by the algorithm at 11% for the discount rate. Most hand calculations use 10% as a standard. Not a notable distinction. With that, I did the calculation and...what to my wondering eyes doth appear but...a much higher value TODAY than the former 22-26 cents I have been saying...yes, that is right...using the numbers I provided, the stock value per share...TODAY...based on the algorithm is...55 cents!

Argue or not, play with the numbers and see that Elite, even under lesser estimates, is still exponentially under valued. Okay, here is the algorithm...go ahead and use my numbers and any others that are based on reality...have fun! “
N2K