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ID Systems Inc. Message Board

  • confucius2050 confucius2050 Apr 9, 2007 10:23 AM Flag

    Jeffries analyst is clueless

    another numbskull applying a p/e against interest income! where did these dummies go to school?

    his target is based on 23x 2009 (!) eps, but most of EPS is interest income, not operating earnings

    you never apply a p/e raio against income derived from interest on cash balances because that's not what the business itself is generating

    why are these analysts covering this stock so clueless???




    Cowen's estimates show operating losses in 07 (4 Ratings) 22-Mar-07 08:53 pm Cowen has go them doing the following in their 3/2/07 report:

    Fiscal Year....Sales ...Operating Profit....Net Profit

    2005 $19,004...$532...$851
    2006 $24,740...($1,568)...$1,359
    2007 $28,715...($941)...$3,003
    2008 $36,616...$1,622...$4,550

    the big swing between Net Profit and Operating Profit is the interest income earned on their cash, which is a non operating item, and not what the business itself generates

    So the only reason it looks profitable is due to the Int Income

    the problem with IDSY is that they are only earning money because of their interest income on their high cash balance, which is not what you apply a p/e multiple to

    while I would not short a stock like this, I can see what the shorts see and it's a downside risk for sure

    $143MM market cap divided by '08 projected $1,622,000 in operating earnings = 88x

    $72MM enterprise value divided by projected '08 $1,622,000 in operating earnings = 44x

    both of those calculations were not even tax effected, which would drop their values considerably

    $1,622 - (1,622 x .35%) = $1,054

    $72M divided by $1,054,000 = 68x

    my point is that you shouldn't look at their net income projections for EPS and use them for p/e purposes

    it's pretty pricy already even on an enterprise basis which backs out the cash from the market cap, even if Cowen's projections materialize

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