Everything is looking great, revenues are growing, profits have finally come about but there is a huge red flag. The Price-to-Sales ratio.
Market Cap of $388 million / Sales of $28 million put the price to sales ratio at 13.85.
In other words, let me give you a comparison. An established company in Conoco Phillips has a PSR of 1.18.
Let me put this another way. You are paying for a valuation 13 times the volume of business this company does. Let's all roll on back to the Dot.BOMB era and buy at 100x PE multiples. If your buying here, you are nuts. Nominal returns will only be achieved through huge rates of growth.
Nice post Tyler. Followed you from FLL. PSR always wins out. This stock is about to hit a brick wall with this high of valuation and lackluster earnings report. Well, to be fair... Only gang-buster growth would have kept this party moving higher.
Interesting find. Nice work on this one.
Black - on 4/18 when you posted this SYRG closed at $6.65. "This stock is about to hit a brick wall with this high of valuation and lackluster earnings report...." Sound familar? Keep up the good work.
Do you boys need attention? What do you know about the management or business model for this company? Don't be afraid to do a little more research rather that quoting a few statistics and giving yourself a politicians applause!
Sentiment: Strong Buy
Haha what the hell? I have never had ANY position in this company EVER. Long or short.
Let me re-post the end of my last comment on here: Oh and now were are at a $400 million dollar valuation with $28 million in annual revenues. The red light has to go off in your head at some point.
Conoco is not exactly shining example. Both Kodiak and Conoco will be spending 4 billion in the Bakken over the next 5 years and Kodiak is expected to get double the added production vs Conoco. I.E. double the bang for the buck
I'm not arguing that the company won't grow. Just don't expect the equity to respond anymore like it would in the past.
The equity is priced at SO many times the actual amount of business this company does, even at Mr. jdcralnc's rate of 80% growth for anything as in sales or earnings (top or bottom line) you won't see the equity respond all that well.
Going back to the great depression there are very few companies who ever overcame enormous Price-to-sales ratios. P&G and IBM namely top the list.
A Price-to-Sale Ratio of 3 would generally be considered high. Were doing with a PSR of almost 14!!!
SYRG has a fwd PE at 13... again, growing revs 80 pct. They have 40 pct margins... 4-0 pct. Find comps in this industry and then we will compare valuation. i dont disagree its pricey. but these guys are dominating, in particular vs peer. hence the valuation. would you feel better if their margins were standard single digits but their sales were higher? thats the problem with looking at one stat. personally id rather sell one widget to make a buck than needing to selling 10 to make the same buck.
Dot.BOMB? No comparison. This is oil and gas in the ground, proven reserves and potential wells to be drilled. A three year old company doing all the right things. Come back in a year revisit your assesment.
Sentiment: Strong Buy