New partnership seems to be working.. First time profitable in 4 years. Assuming the growth continues, what do you all think a good P/E should be? Currently there's 26.7 mil shares outstanding. That would give them a Market Cap of $200 million today on about $500K earnings last quarter. At 20% growth I think that would put them around $145 million gross for the year and based on current profit margins they'll make $2.1 to $2.2 million earnings over the next 12 months. This would give our (current) share price a P/E of about 100X assuming future earnings on 20% growth.
With margins depressed, in my opinion P/E is not the right measure for the stock currently. I think you should use a next 12 months revenue to enterprise value multiple. If you take the revenue they did this quarter and simply annualize it, you come roughly to $130m. Enterprise value is roughly $178m right now so you looking at a stock 1.36x rev/ev. Stock is cheap as dirt. My guess stock will probably trade 2.5 to 3X over time and thats far from being real expensive because they are cash flow positive. JMHO...stock has a lot of runway
Great topic. We should all be considering current and future valuation. But I think you're assuming current net margins will remain stagnant. There is a good chance that as revs grow, a higher pct of those revs will fall to the bottom line. That's because Cardionet is not highly capital-intensive (Schwab shares that opinion), so scaling up should result in increasing net margins. Also, with no debt to service, increasing revs can again fall to the bottom line at a healthy rate.
If mgmt branches out to remote monitoring of other health conditions, and doesn't get too aggressive with buyouts, this could be a long ride up regardless of the market or economy, with only occasional setbacks. Perhaps the downside risks are competition, a near-term buyout, -- or a sudden cure for heart disease.
To answer your question, I think 100X leading P/E is high for 20% growth. So overvaluation is a risk. But with their scalability and gross margins, as well as potential in a growing market(s), I feel a higher estimated P/E is justified for CardioNet (BioTelemetry) in the near term. Out of curiosity, what profit margins are you using, and what source did you use? Thanks in advance.
I see what you are trying to do... create a panic. First you claim they are being delisted and that was debunked. Now you are attempting to use shoddy fundamental analysis to scare people out of their shares.
If you take your time and go through the earnings CC, you will see your 20% growth rate is WRONG. There are not enough people on this board that have enough shares to effect a panic. FYI!! 9 mil shares traded today which is around 60% of their actual float. This means that the algorithms will dictate tomorrows direction and I am betting that it is going up!
I just found the company yesterday man. I'm not trying to create panic. The reason I posted the delisting notice is because I saw it before anyone else. And BEAT is in fact being delisted so I don't understand why you say otherwise. You may also notice that I was asking intently why it was filed..
I spent the better half of last night reading through the reports and am very interested in buying. But I'm neither short nor holding at the moment. 20% growth was just my own estimate. It's not wrong or right, just an assumption.