Saturday, November 24, 2007 8:36:26 PM
How do we know we'll have a 40% profit margin?
I do agree that because of the extremely high growth phase that the company is about to undergo, a high PE ratio is deserved. Using a standard PEG ratio of 1.5, a growth rate of 30% can support a PE ratio of 45. So let's say just $15M in revenue for all of 2008, and earnings of $5M. That's EPS of 5 cents. A PE ratio of 40 (justified because of the high growth) gives a share price of $2 by the end of next year.
Sounds great to me!
Any way you slice the numbers, we are extremely undervalued!!
Mike
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