Consumer Automotive Finance Inc (CAFI)

[snow]

Cheap?

Some shallow stock speculators might think that NWAU is cheap now that the price is down by almost 50 percent since the high of $ 2. That would be a rash and foundless deduction. In fact the sharecount fully diluted is up by almost 100% compared with what was assumed when the stock price was $ 2. Hence the shares are almost as expensive now as then in relation to earnings per share.

What is alarming is the explosive sharecount. In November 2004 the sharecount was 10 million. Now it has almost tripled. Even if the company were doing well the explosive sharecount would dilute earnings per share a lot. This fact does not tally well with the impression the company spokesman communicated as recently as May this year. Here is an excerpt: "There is still only 16 million plus shares total issued.

The money man behind Now Auto is Michael Fisher. Mr. Fisher is one of the
founders of Now Auto and is a major stock holder.

Now Auto is well financed and doesn't need to sell stock to raise money."

As far as revenues and profits are concerned, the company claims to sell its cars at an average price of $ 7,000. During June and July the company sold an average of about 200 cars per month. This would seem to bring in about $ 1.4 million per month these months. Annually, this level of sales would add up to about $ 17 million. This is after the major acquisition earlier this year. Hence it would seem that sales during this summer may be an average for the year at best. Assuming an average profit margin of 15%, which I think may be too high since revenues seem to lag substantially behind projections, profits would be about $ 2.5 million. This would be a little less than 10 cents per share. To me these seem to be pretty optimistic projections. I no longer trust the projections of Mr Miller, for a number of reasons. A p/e of 10 is not very cheap for a Bulletin Board company.