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Universal Security Instruments Inc. Message Board

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  • mmmparsley mmmparsley Feb 16, 2007 9:34 PM Flag

    its official - IBD100 is done

    I don't think it matters because the buying has been institutional. I don't think many shares have come into UUU because of IBD, but that's only my personal opinion.

    Personally, I don't think this quarters numbers were that great now that I notice we had a small tax benefit. With nominal taxation, we would have earned around 1.4-1.45 million. The(imho)lackluster numbers this quarter were more than offset by the standard that is now set as we are positioned to compete more aggressively in the retail market. I think this is just the beginning of that new trend. Now we see what may have been one of the driving factors in increasing production.

    On another optimistic note, it's likely that each quarter from here on will be stronger than this last one for a long time to come. Even still, if we earn 1.45 million (when nominally taxed) per quarter, that's 5.8 million a year at what should be sold for at least at 15 multiple (the reason the multiple is 13 is because of not being fully taxed over the last year).

    A 15 multipe on 5.8 million is an approxtimate value of 36. Which means fair value at this moment is at least 20 percent higher than we are trading right now. Watch for the meandering movement towards 36 over the next 2 months.

    That being said, I'd guess that the next 4 quarters will net about 7.0-8.0 million in net income, nominally taxed. Put a 13 Forward PE on the next four quarters and we are 27% undervalued. Fair value from that guesstimate would be around 38.50.

    So perhaps, 37-38 will be where we trade in 3 months, although I wouldn't sell there if it went up to that level as soon as Monday. I think we should expect 45-60 by the end of the year, with more PPS growth ahead of us.

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    • parsley,

      At 7.5 million net income for the next 4 quarters and the most recent quarter multiplied by 4...that's 6 million net assuming current net income based on the quarter. that's a 25% increase in net income. A p/e of 15 on 25% growth in net income is a peg of .6. fair value peg is 1 even though the general market is selling at 1.6, but let's assume it's 1. 1/.6 is 1.67. That's a 67% increase making the stock's fair value 60. If it catches up to the markets average peg then we are looking at 1.6/.6 = 160% increase or 78 per share. Anything beyond that is speculative in my opinion and circumstances will surely change before it hit's that level, but on current earnings pace that's what we are looking at.

 
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