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  • hyulpy hyulpy Sep 11, 2013 11:46 PM Flag

    Why is LLEN so cheap?

    The last 4 earnings releases showed EPS of .21,.42,.18,.27, for a total of $1.08. At the current price, that's a p/e ratio of about 2.5, give or take. Why so cheap? Plenty of reasons. But one reason that isn't talked about much on Yahoo finance: The financial statements show that most of the profits turn into either PP&E or Construction-in-progress. The cash never builds up. Perhaps the statements are correct. After all, LLEN has been buying and building mines. However, I can't help but remember that Worldcom also showed profits, and a low p/e ratio. But it turned out that there was fraud. Eventually, it was proven that they posted fake fixed assets to their books in order to inflate reported earnings. Their books, by the way, were audited by a Big-6 accounting firm. Arthur Anderson, I believe.

    Most companies with such a phenomenal earnings and growth record would have a p/e of 15, perhaps higher. Why is the p/e 2.5? I don't think it can be attributed entirely to shorts that are manipulating the stock. I hope its not fraud... Would be nice to get assurance from KPMG or the like as their permanent auditor.

    Not a sermon. Just a thought.

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