Mobilepro Corp (fka MOBL)

[mike306oh]

MOBL Valuation

Just for the sake of a discussion, let's take as an example 2 stocks that have very low/very high "valuation numbers," in a similar sector: MOBL @ NEOM

What do we know from the last reported fillings:

MOBL:

Net sales: $17.1MM/last Q, and estimated:
$24.5MM to $25MM this Q
Gross Profit: $8.5MM last Q
Net Profit: -3MM, last Q, expected positive
next Q
# of shares: 349MM (Source Market Watch)
Market Cap: $52.22MM
PPS: $0.16
Proven increasing Q after Q revenue for the last 4 q's.

NEOM

Source: http://finance.yahoo.com/q?s=NEOM.OB

Net sales: $0.4M, last Q, $1.7MM/year 2004
Gross Profit: $67K, last Q
Net Profit: -1.7MM, last Q
# of shares: 437MM (Source Market Watch)
Market Cap: $217MM
PPS: $0.5
Decreasing Year after Year revenue; last 4 Q's, stationary.


Valuation Number:

For growth OTC:BB stocks that are not yet EPS positive, the following formula applies:

PPS = (GR/Ns) x Vn,

or Vn = (PPS x Ns)/GR

where:

GR = gross revenue/year
Ns = number of shares
PPS = price/share
Vn = valuation number (the higher the expectations, the lower the number of OS's, and the higher the proven expected revenue/year, etc, the higher the Vn).

For growth stocks, Vn usually varies between 2 to up to 50, although I saw as high as 100 for short periods of time (depending on many factors, including: management quality, sector value, potential future position of stock within the sector, growth expectations, number of shares - the larger the OS, the smaller the VN etc, etc).


Using the last (known) #-s:

VN for MOBL: 0.82 The calculation assumed a conservative value of an expected revenue/year of only $17MM/Q x 4Q's (number already proven last Q). For a company like MOBL (that already has shown an explosive growth over the last 4 Q's, and the increase in revenue is expected to continue, and with an expected EPS positive this Q, this should be at least 2, which at this point will translate into a PPS minimum of (2/0.82)x.16 = $0.39.

VN for NEOM: 128. This has assumed the last proven revenue (the combined last 4 Q's revenue) of $1.7MM. For any company, a Vn of over 100 is not sustainable under present financial situation, # of shares, and PPS. Simply put it, for a company that has not yet proven a revenue growth patern, this is way too high. In fact, until NEOM proves a pattern of increased revenue for at least several Q's, although the expectations are very high, a Vn > 50 is not sustainable, IMO. This will put the maximum sustainable PPS (for the near future) to: (50/128)x0.5 = 0.195.

PS: The above is, of course, JIMHO. Do your own DD, and do it well.

Mike