Replies to post #85542 on Bravada International Ltd (BRAV)

[growthstocks]

7.5m shares a quarter. 50m shares for the year. Rest towards expansion. Sounds good.

[squeak1]

Maybe I am wrong but it's my opinion Danny would be buying back shares for himself!
Which is what I would be doing
This company could easily be bought out by a larger concern and Danny would move on to his next adventure a very rich man.

[Beezerr34]

Jammin, most of what you're saying would be absolutely correct if BRAV were carrying a different valuation. The key here, and the reason that BRAV will most likely be using ALL of its cash on the buyback, is because of its valuation. This isn't a BRAV specific discussion; it's a valuation discussion. High growth companies with similar gross profit margins trade between four to eight times annual revenue. (Keep in mind that BRAV's growth rate is MUCH higher than the comparisons.) With some very simple math I'm sure you can see where I'm going with this. Bravada SHOULD use ALL of its cash for a buyback because it provides the best value and ROI for that money. Buying back Vs. expansion Vs. dilution ALL comes down to valuation. For example, if BRAV were trading at a much higher market cap., then I would expect all the cash to be used for expansion and I would even welcome dilution for expansion. Again, it all comes down to valuation. Oh, and before a bunch of other people (that I won't be responding to) chime in and start talking about cash flow statements and earnings: 1. This isn't a freaking accounting class. A discrepancy in a cash flow statement DOES NOT change the value of the dollars that this company is bringing in. With that said, yes, I would like to see the cash flow statement tie out perfectly too, but my god it's not going to change the future success or failure of this company. 2. Anyone that looks for GAAP bottom line earnings from a high growth company has absolutely no idea what they're doing. This is from a previous post of mine:

Here's another "fun fact." The earnings reported to the street by most companies are on an adjusted basis. The expectations that analysts set for companies are also on an adjusted basis. I encourage anyone to look up a recent financial release by any big company, and you will see that the "printed" numbers are adjusted earnings. The GAAP numbers will sometimes be drastically different and that is especially true with growing companies. Now, with that said, it is necessary and important for these companies to report GAAP numbers as well, but you simply CAN'T use those numbers to determine whether or not a company is "making money." That is the very reason why analysts use, and companies report, "adjusted earnings."

I hope the above helps Jammin. The frustration is not at all directed at you. Quite a few of us have all but stopped posting because most on this board are/have been focusing on all the wrong things. (Again, you are not one of those people.) I have a massive position here because this company IS focused on the right things.