Ideal Financial Solutions, Inc.(fka IFSL)

[Ashaman]

Let me bring you some numbers to think about jwahl:

Data for IFSL:
O/S = 22.25M
%profit vs total rev Q1 2011 = 23%
Common used P/E for established company = 20

July revs = $800k
August revs = In line of July revs, let us say $800k
September revs = Let us assume that IFSL sustains the $800k number

==> That would lead to $2.4M in revs for Q2

Potential profit = $2.4M rev * 23% profits vs total revs = $552k in profit.

As you can/could alread see, upon the recent business updates, one could say it is fair that business will continue to do well in the coming quarters. Let's just assume that IFSL management is able to sustain these decent quarterly numbers of $2.4M. Well, that would result in a total yearly rev of $9.6M which would represent a profit of $2.208M

With a P/E of 20, and O/S number of 22.25M and the projected profit, IFSL's fair pps should be $1.98

NOW... Here comes the interesting part

IFSL is not in the business to sustain their, already, decent numbers. No, IFSL management is targetting to set up as many successful cash flow generating verticals as possible. There is a consensus that IFSL management will succeed in that if they keep on hitting the right buttons like they have already done some (New Benefits, Payday loans,...).

Next to that IFSL management worked hard to increase their %profit vs revs. A 23% margin is sweet but did you know that IFSL management succeeded to get a 39% margin during Q2 2010 (if they didn't had to count in the $707k number for the cc issue, their income would have been $909k)? To be honest, this 39% number is a bit too far fetched imo but lets take something in the middle, maybe 30%... If one would repeat the calculation for a fair pps, one would get a number of $2.58.

Another this is the widely used P/E of 20. This is a typical number used for companies on the big boards (current P/E of the S&P500= +/-20). These are companies with revs in the billions. According to some of our fellow members on this board, it is not uncommon that smaller, fastly growing companies trade at P/E's in the range of 30-40. Hey, repeat the fair pps value and you'll notice just how fair this company is currently trading...

In my humble opinion, analyzing stuff too much of course, I genuinely believe that IFSL is currently trading at a price which does not reflect its true value!

Grtz, Ash