Stayfocused, to answer that Acquisition question...
Although I am not Investor911, please let me attempt to logically answer your question.
Within the market, you have good dilution and you have bad dilution. When companies/stocks increase their share structure to sell shares to line their pockets or to create pump and dump situations to line the pockets of others… that is considered bad dilution.
Good dilution is when a company increases their share structure by using an increase of shares as leverage to add substance and value to their company, stock, and in the end to their shareholders. This is simply what is known as… growth.
STS is a multi-million dollar company that is on its way to being a multi-billion dollar company with the help of Evermedia as many will soon see why. That is why the union because they need each other to enhance each other’s growth.
So, increasing your share structure to add/bring in some huge value to your company that was not there before otherwise would do well for strengthening your Financials; ie Balance Sheet, Income Statement, etc. This coincide with something else that I have discovered from doing a little more DD that EVRM do have goals of not just getting out of the pink sheets, but goals of getting to a major market. To do this, the rubber is going to meet the mat with them having strong Financials which will allow EVRM to meet those asset and other requirements from the regulatory bodies of that market for approval. Again, this is where STS and Evermedia will complete the union to help one another to get there.
To take these thoughts a step further since you mentioned an EPS, I think more is needed to understand why being able to derive an EPS is important for a company. EPS stands for Earnings Per Share. If EVRM is going to graduate to a higher exchange, having profitable Financials to reflect a positive EPS is a must.
The EPS is derived by the formula below:
(To keep it simple, I will explain this in “Net” terms to not get into explaining the EBITDA.)
Revenues – Expenses = Income
Income ÷ Outstanding Shares (OS) = EPS
As you can see, the OS is the key Fundamental Denominator for assessing Fundamental Valuation. This is what is used by the ”Big Boys” trading on the major markets for assessing their value for major investors to fundamentally decided if a stock is undervalued or not.
Heck, since you got me started, I might as well explain this too. Now, when you see a major market stock that is trading at $12.00 per share, but only had an EPS of $1.00 per share, understand that it is trading at a multiple of 12 times greater than its EPS because of the growth rate that has been factored in from the growth of that Industry and/or Sector. That number 12 is what is known as the P/E Ratio (or the Price to Earnings Ratio).
Generally 12 is a conservative P/E Ratio that some Industries and Sectors have much higher P/E Ratios to mirror the growth of how all of the companies within that Industry and Sector are performing/growing.
Many use the P/E Ratio with stocks that have the potential to possess a positive EPS. The P/E Ratio is often considered the minimum price investors are fundamentally willing to pay for a stock when multiplied by the EPS. The P/E Ratio is used to examine the relationship between a company's price per share and EPS determined by:
Share Price/EPS = P/E Ratio
The P/E Ratio is a multiple to use for determining stock prices to convey the P/E Ratio as a general growth expectancy rate. The P/E Ratio is usually determined from an average of the top 20 to 30 companies in that particular Exchange/Sector/Industry.
It is assumed that each company within that Exchange/Sector/Industry will grow with the same expectancy rate under certain Fundamental Principles in relation with a company's Revenue, Expenses, and Outstanding Share structure or its EPS to better put it. The P/E Ratio gives you an idea of what the investor within the market is willing to pay for a company’s earnings. There are a few options of thought of which are neither right nor wrong, but are only different trains of thought through personal preference. Below are some of these variety of P/E Ratio options for consideration:
High P/E Ratio is Bad
Under this thought, investors see a stock with a high P/E Ratio as a stock that is overpriced. Investors believe that the stock is trading way to high given its fundamentals. Investors believe that the stock has grown way too fast and that the market will realize such and the price would drop to justify this thought.
High P/E Ratio is Good
Under this thought, investors within the market believe that high hopes exist for the stock’s future. It’s believed that the higher the P/E Ratio, the more growth potential it has within the market because it's showing growth higher than the average conservative market P/E Ratio. It is assumed that the company would continue its normal expectant growth rate. Investors are willing to pay more for a company’s earnings than what could be considered a conservative price to others because of where they believe the stock will be fundamentally going.
Low P/E Ratio is Bad
Under this thought, a low P/E Ratio would reflect that the investor has no confidence in the future of the company’s earnings and stock. They believe that there is no market interest due to lacking fundamentals.
Low P/E Ratio is Good
Under this thought, investors believe that the stock is a sleeper that has been overlooked by the investors within the market. These are stocks that the investor believe they are finding before anyone one else does before they trade into a high P/E Ratio. Those supporting a low P/E Ratio believe that the lower a P/E Ratio, the more undervalued that stock is within the market as compared to normal growth expectancy rates from companies trading within their market.
***********************************************************************************************************
As far as which thought is correct… I don’t know? There is no correct way in my opinion because there are too many variables that could change the way investors react and think to justify why they are buying a particular stock. I think people would be fair to themselves to be flexible in their considerations since you won’t know what actually the right way was until after the fact. It all comes down to what you as an investor is willing to pay in a stock and their earnings.
It would be very ignorant of me to “finitely” state which train of thought is right or wrong. It will ultimately depend upon the substance that EVRM continues to deliver to the market and how the market absorbs or interprets EVRM to confirm its maturity. With EVRM, I think as they continue on their path for enhancing their Revenue stream, we will be Golden since I am very confident that they will maintain at least a 25% profit margin through their growth.
Later, I will be posting some valuations for EVRM along with logic to justify my thoughts of which understanding the thoughts within this post will help see I how I had derived these thoughts. I think we are Golden with EVRM and the STS and Evermedia union will be what really graduates EVRM to its next levels. I am expecting for the closure of the acquisition to take place soon.
v/r
Sterling
Market Data 
Markets 
AI
