Replies to post #16095 on Southern Home Medical Inc (SHOM)

[rabbit67]

Ive been going over the numbers of the value , of our medical staffing is worth , to our new partner , I.E. merger ...

Its quite large ...

[stock_peeker]

What is a REALISTIC VALUATION? It has really skyrocketed since the March 7 news mentioning progress toward a merger.

SHOM increased annual revenues to just over $1 million/yr by issuing lots of stock last year to buyout some of their more profitable franchisees.

Now a little over a million dollars in annual revenue is not chump change, but the overall margin (showing only about $60K profit) is not impressive. They do have costs of running the operation, but geesch, they must be spending lots on IT platform maintenance and salaries.

Personally I would not expect SHOM to sell for more than 3xRevenues, or about $3million, so that means current valuation of $.004/share is about right.

$.004/share x 770million shares = $3million

Given that there may be a merger rather than outright sale, the "merger" may be nothing more than a combination of equals, and the result would be nothing more than a somewhat larger company with greater geographical footprint, but it's not clear that economies of scale will really make any combination much more lucrative.

If it pops to above $.005/share I may have to sell. Any buying above that level would make it seem like Greenspan's "irrational exuberance" was alive and well with SHOM.

Best to All,
'stockpeeker'