The most appropriate valuation measure for ANAD is the Price to Sales ratio. The Price to Book ratio is excluded since it most likely underestimates the company's book value by overlooking hidden assets such as intellectual property, while the PE and PEG ratios are not meaningful. Therefore ANAD seems expensive with a Price to Sales ratio of 2.926, above the Semiconductors industry median PS ratio of 1.64, ----- Straight from Securities Valuation
No, BECAUSE THE CASH adds to the value of the company. The assumption is that the cash is invested to facilitate growth.
With the company stating that 60% of incremental sales is going to gross margins, presumably that new cash is being put to high RETURN ON INVESTMENT PURPOSES (ROI).
Also, price to sales ratios (PSRs) have quite a range on wall street. There are many companies that trade at PSRs of 5 to 10 and even much higher. I don't like to buy companies with very high PSRs, but you also have to realize what are you paying for. You could point out that how much you pay for an automobile on a price per pound basis. A clunker used car would be very cheap per pound, and a Cadillac would seem very expensive. But, the performance and prestige, and comfort is quite a diference.
The same goes for companies which are bringing in large profits, and have a very exclusive competitive position, which will likley allow them to continue outsize profits. Also, you must look at the growth rate. There are few companies which earn large profits, and can see fast and large growth well into the future. These companies can be looked at as quasi monopolies. They print money, so to speak.
This is your justification for the ANADs run up, and the PSR would not appear to be excessive, copared to comodity type semi companies.
The best performing stocks have unique competitive positions which allow them to grow revenues quickly, AND with very outsized margins. When you combine these two factors, this equates to the goose that lays the golden eggs. This explains the run up, and the justification for ANADs current price, and the likley continued run up. It also explains why the shorts are in trouble.
Also, discounted cash flow analysis is the most sophisticated analysis of a company's intrinsic value. I won't go into this deeply, but it is simply a model of what the cash flows the company will earn will look like over the years. When you do DCFA on a company like ANAD, which looks as though it will be growing very fast, and earning very high margins, and which is a couple of years ahead of it's competitors, the DCFA BUILDS UP FREE CASH FLOW VERY RAPIDLY. tHIS IS WHY anad IS LIKLEY UNDERVALUED, and why Wall Stree can see that the value of ANAD Iis greater, probably significanntly so, than the present price. This is why ANAD is in a good negotiating position to raise capital. This is why the investment firms will be able to easily sell out the subsrciption. And, another point is that with all this work about to be done on marketing ANAD stock, this may be another factor to goose the stock performance, once the shares have been sold. There will be many people made aware of ANAD again, and the story will be spreading form lips to lips.
It will be interesting to see the next short interest numbers, and whether the shorts may have subscribed to the new issue, as Bottomfizzure speculated upon.
I would advise retail shorts to use the next week or two to cover their position. You are in a loosing game with ANAD, imo. Surely there are better candidates to short.
How will this public offering affect the stock price?
6.7M shares is an increase of about 15%. This would increase P/E,P/S,PEG, and other ratios by the same amount. If the Market currently values the stock at these levels, wouldn't the newly valued assessment be 15% lower.
C'mon.... especially since you believe (ostensibly) that you're just being objective.
The first time I saw a stock selling at $20 having earned a dime in the last 12 months, I gasped. (That was many years ago.) ... One learns pretty quickly that if stocks have value because one expects them to pay dividends, and if that's predicated on their making money, one is going to have to come up with estimates as to HOW MUCH money they will earn in the years ahead.
(This lecture will end in seconds, I promise.) And everybody agrees that growth of Sales or EPS on the order of 80% p.a. is not sustainable. So, without reducing it to a formula -- because none exists -- analysts look out a year or 2 and one seldom sees (pharma is probably the most obvious exception) a PE of 200, say, using those projected EPS numbers.
I'll grant you that price/sales is a very useful ratio, but an extension of the above (as elementary as it is universally followed on the street) demands that one "adjust" what one believes is an appropriate ratio in situations where the present and the near future (extra points, of course, for any confidence one can assign to those future numbers) are enormously different. In short, ANAD is not out of line with other "semis" using your favored P/S ratio -- IF we look out into the future. It's not easy, and it's certainly not certain, but it's sound! Your method is good for debating neophytes -- not much else.