Strattner Financial Group (SCNG)

[neoboarder]

“PPS at the end of 2012”

$0.0027

Assumption
1. EVFL will not generate any more net income other than $197,000 in 2009.
2. EVFL will have Durant facility running and produce half the maximum capacity of 100 million gallons. Sales revenue and net income in 2010 will be $100 million and $10 million, respectively.
3. EVFL will add 2-3 service stations every year as capital allows, each station selling half the projected maximum sales of one million gallons@$3.00 per year. At the end of 2012, the number of service stations operational will be 8. Average sales revenue and net profits are $1.5 and $0.15 million respectively.
4. O/S will be 50 billion at the end of 2012
5. EVFL will distribute 50% of annual earnings as dividends
6. Required return is 15% per year
7. Expected growth is 10% per year

Net Income calculation (for the year 2012)
1. Durant facility: $10*1.1*1.1 = $12,100,000
2. Service Stations: 0.15*8 = $1,200,000
3. Total expected net income for the year 2012: $13,300,000

DEC, 2012 PPS calculation
1. Total Dividends (50% of net income): $6,650,000
2. Dividends per share = 0.000133
3. PPS calculation = 0.000133/(0.15-0.10) = $0.0027
4. P/E ratio = 10.2

Variables
1. Net Income
2. O/S
3. Dividends
4. Required Return
5. Expected Growth

GO EVFL!!!