Replies to post #514621 on Mr Cooper Group Inc (COOP)

[Evintos]

Is there a method to figure it out?

In general yes, but for WMIH/NSM post merger, technically no (for now)-

P/E = Market Value per Share/Earnings per share

The future earnings per share is easy enough to estimate. The market value on the other hand, that's difficult to know. What will the market think WMIH is worth post merger is anyone's guess. In my opinion it will trade above book value, but how far above book value, I don't know.

I'm hoping it's a 20x multiple. I believe that is the sector average.

[Evintos]

An example calculation would be...

take NSM P/E ratio = 59.97 and multiply by earnings per share to get the Market value per share.

59.97 x EPS = P

EPS in this case would be the NSM earnings of roughly $0.30 per share divided by ratio post dilution.

416,012,872 is the amount of shares proposed to be registered for NSM conversion + 206,168,000 for rough amount of total outstanding shares post merger dilution. Round it off to 622 mil for the purposes of this example

622/97.8 = 6.35

Take $0.30/6.35 = $0.047

Take the 59.97 x 0.047 = $2.82 pps(rounded up).

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If it was the WMIH P/E ratio

142 x 0.047 = $6.674 pps

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Of course using any of the current P/E ratios is pointless.
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Last example

Assuming $1.83 PPS (post merger valuation by KBW)/0.047 eps (post dilution) = 38.936 P/E ratio

[jerrylev]

Basically, we have a company with earnings merging with a company with no earnings but a NOL that will save it 20% in tax - no the NOL is not going away, boy. So if the dilution is more than 20% because there are more shares then we have a dilutive merger as Seeking Alpha calls it.

Except if WMIH will bring something else to the table beside the NOL...~~~ We shall see.

At NSM pps of $18 and change, giving the exchange ratio then WMIH share should be 1.8-1.9 as somebody has calculated.

So because the stock will be WMIH and assuming that WMIH will bring nothing to the table beside the NOL then WMIH stock will trade slightly lower than 1.8.

But if there is something else then the sky is the limit :)