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Muscle Pharm Corp. Message Board

  • gjcarlson gjcarlson Nov 17, 2013 1:45 PM Flag

    interesting question on valuation

    Our next question is a follow-up from the line of Philip Anderson with Pinnacle.
    Philip Anderson - Pinnacle
    Your answer to my earlier question regarding advertising and focus on growing topline, kind of sparked my little grey cells from the early morning lethargy. I recall that some doing work on the industry before we invested, I've come across four companies that had been acquired in the three years or so and they have a few things in common, there is optimum nutrition, PES nutrition, shift nutrition and max nutrition.

    Now, in addition to having nutrition in the name of all four companies, they all required for 3.5 times enterprise value to revenue. And based upon the current enterprise value of MusclePharm, looking at Sidoti's estimate of $158 million for next year, MusclePharm is trading for about 0.5 times or at one-seventh of the [ph] ticket valuations of those companies and their revenues averaged to $165 million, at the time that they required or approximately what MusclePharm is expected to do next year according to Sidoti.

    Now, we go to the setup, the company appears to be massively undervalued and now that the SEC issue is almost entirely behind the company, which presumably clears the way for an uplift in not too distant future, what is the company's management intentions to create broader awareness on Wall Street of the quality of this business here and the valuations going forward?
    Richard Estalella - Chief Operating Officer
    Well, I think it starts us, with our ability to again give you guidance next year on what we're going to do, beyond just topline and then executing to that standard. And you're exactly right, you hit it on the head, we're extremely undervalued. We all know it. It's not indicative of what we're making happen at the marketplace, but what we're putting into this business from a sweat equity standpoint. So our goal is to make sure that in 2014,we have a much clearer picture of where we're heading and hopefully you can all help us to

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    • I agree that by certain standards MP is undervalued, but the price is the price. Below is my recipe to increase the stock price.

      1. If it is undervalued, the market will correct that and people will step up and buy shares in the OPEN market. If MP stopped selling shares to qualified investors directly and made them buy shares in the open market, they would have to bid the share price up in order to build a position.

      2. Get listed on a major exchange. Being listed on major exchange in itself will promote the stock. It looks like MP is close to getting listed on a major exchange, so that could be accomplished very shortly.

      3. Be patient! Stop paying promotional companies to do interviews and promote your stock. If a small fry sees the promotional interview and actually buys stock, a few hundred or a few thousand shares is peanuts and will not produce a sustained advance in the price of the stock. The belief the large institutions are going to see the interview and now decide to buy stock is misguided. Kick butt earnings and revs will definitely get the institutions attention, that is the best promotion of all and it cost nothing!

      Best to all!

    • Exactly. Which is why they need to stop giving stock away and using it to purchase assets of dubious value.

      It the stock were fairly valued @ $10 and management granted itself 1.5M shares over the next few years, reasonable people might have different opinions about whether or not granting themselves $15M was excessive. But given that the stock will likely be trading closer to $50 than to $10 in 2-3 years, the true cost of stock grants / purchases is FAR higher than face value.

 
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