Further down we covered when to use P/S valuations, and if you were here for the spring "semester" this is all review. Welcome to Cowbell U. Later we'll engage in hearty session of basher hazing. Let's be honest most us are men, and we have the attention spans of goldfish, it's not right or wrong, just the way things are. Hence we start with 5.31, or as I like to call it, the answer. Kinda like Jeopardy which I hate, because it makes me feel as dumb as a BIOL basher.
With the answer in hand, and a knowledge of when and why we used P/S ratio for our valuation, let's fill in how to come up with the numbers to plug in to our formula for P/S valuations.
Where does 61.7M come from? That is the revenue total for the last four quarters, often expressed as TTM (trailing twelve months). When you have time I want you to notice that the TTM has increased every single quarter since 2010, that's why we say revenues are consistently growing when buffoons start talking about "sequential growth" which simply compares one quarter to the adjacent quarter, and is totally the wrong way to analyze a company like BIOL. When you hear someone say "sequential growth" and "Biolase" in the same sentence I want you to think "buffoon trying to sound important", except for just now when I said them in the same sentence.
34.85 is the outstanding shares, don't make the buffoon's mistake and use issued shares which also include treasury stock.
3 is the multiplier, and the approximate industry average P/S ratio. The average student in the class is awarded with a P/S multiplier of 3, but BIOL is anything but average, because it has grown sales every quarter since 2010. 3 is the minimum multiplier that should be used, and when you look at some of the other students like ALGN at 7.8, and SIRO at 3.8 you can expect a higher multiplier is justified for BIOL.
61.7 / 34.85 x 3 = 5.31
Does it work? I used the same method to propose a 5.10 target in March. What does your chart show in April?
Professor Tinkerbell writes, "Does it work? I used the same method to propose a 5.10 target in March. What does your chart show in April?' Applause Applause! Let's here it for the Professor! She predicted a price and then sold at least half to capture her profits and avoided the coming 65% drop in share value!!!!!
What? What's that you say? The professor didn't sell? What? She moved the target price HIGHER and BOUGHT MORE? Even when the price started to fall, she kept pumping her "P?S ratio? Did she ever explain why the price fell like a rock and didn't hold her valuation? No? You mean just like a donkey in a hail storm, she just hunkered down and took it? No? She din't just hunker down? SHE BOUGHT EVEN MORE!
I guess when you make up your own University you don't have to have any standards.
ROFLMAO! P/S ratio of THREE. Wow!
When is the right time to use a P/S valuation? When there aren't sufficient earnings to paint the picture. So we use revenues. Are the other examples of companies that don't use earnings for their basis? Yes, NFLX, AMZN, and the soon ipo of TWTR that doesn't make money but will sell for billion$, or if you prefer something closer to BIOL, check out the quarterly earnings of ALGN 3.5 M losses for the last 12 months yet their stock price has more than doubled in the last year, and trades at almost 8 times sales, if BIOL traded at 8 times sales, shares would be over $14 / shr.
BIOL grows sales every quarter on a year over year basis, and that's why it deserves a multiple above 3, and certainly deserves to trade at more than the current 1 x rev. Don't trade BIOL, own it, because a company is not it's stock, and this is headed higher.
In Biolase case there are sufficent loses to paint a picture over a sufficient legth of time to paint a picture. The implication that Biolase is anything like Netflix and Amazon is laughable.
Looks like I hit a nerve with the basher! I know this is accurate, and why, he doesn't know why, but understands it will happen just like it did in the spring. That's why his multiple alias response was instantaneous. Not a very good poker face... ;)
Tinkerbell write, "I know this is accurate, and why..." ROFLMAO! Everyone who holded this failed valuation method last spring lost 1/2 of their money and I know why.
Looks like meatballs MAP (multiple alias paranoia) is heating up again. I think we can chalk it up to her need for a distraction. She's taking a break from her predicament of compulsively buying into a sliding pile of BIOL. By kicking over the turf enough she thinks that she can smell roses, while we only pick up the scent of manure.
Still nursing that MAP, eh?
Please get comfortable on the couch and tell the doctor about all the voices you're hearing.
You can be cured, but first you have to want to be cured.
It's that easy.....or is it?
You're smart enough to know Revenue is meaningless if a company can't generate earnings and has negative cash flow.
I think many LONGS are still asleep at the wheel and headed to that pile of twisted hopes and dreams at the bottom of the BIOL ravine.
I used to think Tinkerbell was "mart enough to know Revenue is meaningless if a company can't generate earnings and has negative cash flow." But her continued banging the drum for Price to Sales ratio I have to disagree.