I have always been an advocate of a 10 P/E times forward earnings plus book. However, stocks like this don't always reach those loft levels.
The big question is when does Metris return to profitability? It is not Q4, it is probably not Q1. So that means maybe Q2 or Q3 of next year. Take into account that they will likely have a loss in Q1 and overall profitability will not be that high. This of course assumes they can return to profitability which still requires a sizable improvement in their portfolio performance.
The question is what will Metris be left with to generate those profits. Look to some nice pay raises for the employees that are still there. Then look for some more stock dilution as execs give themselves more options in 2004. So a huge earnings potential is not imminent. Indeed, if things don't improve much more from here, they might not show a profit till late 2004. Remember this management team was talking profit in H2/03, so maybe they were just off by 1.