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Optionable Inc. Message Board

  • dalton880 dalton880 Jan 11, 2007 12:40 AM Flag

    Proper valuation for OPBL

    Here is how I would analyze OPBL for a conservative valuation. First of all, the balance sheet is excellent. In fact thay have more cash than total debt. That tells us, we don't need to worry about imminent dilution to improve the balance sheet( build cash position, pay down/service debt, etc). Now, as far as earnings. OPBL made $.04 for the Sept qtr, and will likely make around $.07 for the Dec qtr( based on the $6.8M revenue figure many are counting on). Now, I've called the company and was told that the Dec qtr was generally the seasonably weakest.

    Therefore, I am going to make the assumption that the great growth will continue, and the Mar qtr will be much better than the Dec qtr. It wouldn't surprise me to see $.12 for the Mar qtr. Now let me clarify, we are so far talking about untaxed & fully diluted EPS, but lets say that the company starts paying taxes in the Mar qtr. On $.12, and using a 37% tax rate, they would post $.075 fully taxed. Now, if you annualize that, you would get to $.30 going forward, and if you simply apply a 25 PE, you get to a $7.50 stock price. Mind you, OPBLs peers are recieving around 50 PEs, but they are larger and on better exchanges.

    When I last called OPBL, I was told they were approached by two exchanges. Therefore, I will assume they will be on the Nasdaq or AMEX very shortly. Now, when the stock gets onto a better exchange, it will definitey demand a higher PE. Therefore, I feel that assuming a $.075 after tax Mar qtr, and applying a 35 PE for being on a better exchange and assuming continued stupendous growth( which is still very conservative vs it's peers), on $.30 annualized, we would then get to $10 stock price.

    So my price target, with the assumption of $.07 for the Dec qtr, $.12 for the Mar qtr, and getting onto a better exchange by the time the Mar qtr is announced is $10. I believe that with the announcement of a great Jan and Feb, with trading volumes exceeding 2M/month, the stock will get to $8+ by the end of March. Anyway, that's my take. Dalton

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    • Many thanks for your thoughtful evaluation. Your conclusions seem reasonable to me,

    • Thanks for your detailed analysis of OPBL's earnings picture. I purchased this stock a month or so ago, and have been amazed by its price increase. But, I never could get much information about it until I saw your post. Based on the information I have gleaned and your analysis, I will be buying more of OPBL down the line, and will follow your future posts on this message board. Thanks!

    • I seen where somebody is predicting 6.8 million in revenues for the last quarter. I believe he has a pretty good idea from what I have been researching. Anyway the last four quarters have produced the following in revenues:

      2,191,000 Sep 06
      669,000 Jun 06
      825,000 Mar 06
      263,000 Dec 05

      Do you see what I see?

      We do over 6,800,000 in Dec 06. Compare that to Dec 05. This shows me flat out growth. They must be doing something right. OPEX is online full force and this will represent a gradual build up as well in trade activity and revenues. This all represents strategies for continued growth. OPBL will easily support a high multiple as it should.

      I bet January is generating record transactions. What do you think??

      They are predicting a tech rally this year. OPBL plays in the energy and technology arena. Need I go on?

      As new clients are added the news alone will drive the price higher. Yep OPBL will support a higher multiple.

      Have a great day investing!!!

      • 2 Replies to aitech61
      • unfortunately it seems as if you arent aware of the following facts

        1) OPBL customer list does not seem to be growing, business to top 3 customers (out of ~11 total i think) has grown, to what is now an obnoxious 70%+ of revs

        2) OPEX is barely generating a dime in revenues right now!!! havent you called the company or read the filings and transcripts? OPEX wont be a revenue generator of a material fashion till this summer more than likely...just call the company and ask them, its not a state-secret

      • I totally agree with you, revenues will explode next Q! OPBL will be in the mid to high $4s by the end of this month and in the $6s next month after earnings!

        I don�t know about you, but I�ll be buying any short-term dips today.

    • 10- has anybody actually built a detailed model on what the company can earn (of course assuming that none of these red flags blooms to a full-fledged issue!!)? i have built one out to 2009, and it has a lot of the truth built in and not any of the hype; i also think if they are legit, theyll have to spend a ton to keep up with the big houses and to expand their sales staff and their IT staff and they'll have to spend a lot of money improving controls and compliance as well; they will also have to hire a real auditor and i would assume upgrade their cfo; i also find it humorous that a poster said the company has been approached by 2 exchanges!!! give me a break- OPBL falls short of many of the current requirements for nasdaq small cap, lert alone regular nasdaq; if amex has approached them, that would be a marriage made in heaven, as the amex is notoriously rife with shady cos, id rather OPBL stay on otcbb than go to amex; anyways, i find it hard to believe that anybody with a sane mind would expect OPBL capable of earning more than 15c in 07 (not including tax!); i might be wrong, but how wrong would i have to be to justify the current stock price? especially with all the red flags that exist here- any one of which could cause a blowup at anytime, its called "the pink h" (professional money mgrs know that as the "halt" sign that pops up on your old sun workstation screen when (typically) bad news, or very bad news, hits a company)

      anyways, i call the above 10pts of sanity- as i said, this is my first ever post, and i felt compelled after reading all the filings and seeing how the stock has reacted and all the crazy messages on the board to simply ask people to please actually do some real research,m search for the truth, not the hype

      thanks for bearing with me and im not a basher but rather a stock-picker that does a ton of homework

      these are just my opinions but i have spent a lot of time in my research and would just encourage others, who are investing what id guess is hard-earned money, to just read the sec filings for this and all the stocks u own, esp when theyve gone up a lot or u are buying AFTER theyve gone up a lot!!! know your companies and ask the right questions and form your own opinions, then u can have a lot of conviction in your investments, as i do

      thank u for your time

      • 4 Replies to not_hype_truth
      • Not Hype, Thanks for the post, it is clear you put a lot of time into it. You make several good points, but all debatable. The fact is, red flags are found in all small raidly growing companies. You have to look at those red flags relative to other companies and their respective potential. Watching CNBC I constantly hear bear arguments about the economy, but not one ever mentions the relationship between risk and multiple. It is easy to point out the looming risks whether it be declining real estate prices, inflation, defecits, etc, but the only thing that matters is the amount of risk relative to the markets perception/valutation. OPBL is highly speculative, and I hope people investing in it are aware and don't need your warning/concern. That being said, I think the long case is compelling and the red flags sound more speculative. You say strong sell, but I could suggest a few candidates you should short first, most have a speculative long argument AND are being crushed by debt.

      • Read thru most of ur post..its all mere assumptions / suppositions rather than facts..

        You doubt everyting abt the company..their auditor, their transaction vol. etc

        why can't you just believe its a growth story..

        Big brokerage firms often use 3rd party providers..the OPEX platform has been developed by people having years of brokerage experience and catered towards a very niche area..

        I think it will be successful, and i think it still has a lot of room to run..

        If you're sore for having sold early, jump bakc in, its not too late..

        The next CC will be a blow out

      • not_hype_truth, what's your point? Except... You really know how to make a short story long...

        Sorry to waste your time with a short post.



      • peter_norths_proctologist peter_norths_proctologist Jan 12, 2007 4:21 AM Flag

        And yet, no insiders have sold a single share of stock into this run-up in price. I imagine that must really piss you off to no end, lacking that most important feather in your cap. To think, you could have had 11 points of light, instead of 10.

        Of course we already knew 95% of the things you mentioned in your posts. How could we not? You've been harrassing everybody with the same story for weeks, on both Yahoo and Raging Bull, using at last 5 different user ID's. Don't you have anything new?

        I'm sorry if you work for a competing company that is losing business to OPBL - or even worse, you are a derivative floortrader dealing with the process of extinction. But that's no reason to air your sour grapes as often and repeatedly as you do.

        Good luck in life

    • 5- have you have done a thorough analysis of the companys current cost structure and margins? it's very clear if you have, or if you would simply call the company, or look at comparable companies, that OPBL will be unable to sustain margins at their current levels- i mean, do you really think a company that is going to be as big as you seem to think it will be can do so with a full-time employee base of 13 (their last official reported #, i believe); also, their filings also note they are planning to move headqtrs to manhattan, where real estate prices are much higher than briarcliff?

      6- have you analyzed the quality of the revenue stream? in the most recent qtr, 3 customers accounted for 70% of the gross revs!!! i wonder if that is a good sign of OPBL growing, or of these three customers temporarily being more active in natural gas trading (06 had unusually large range in nat gas prices due to gulf hurricanes, 70+/bbl oil and the collapse of Amaranth); you could even go a step further and ask why there isnt material growth in the OPBL customer base- and further speculate that since OPBL mgmt owns lots of stock and has lots of options, and that they know the hype/mo aspect of the stock is driven by trading volumes, whether they are incentivizing these three core customers to ramp volume through granting OPBL options or through favorable pricing, as essentially they know that while the business may be dilutive or have low incremental margins, that they'll grow their own net worth faster if the OPBL stock goes up (this part is conjecture but is certainly not impossible- esp when you consider how mgmt has been on a an arguably shameless promotional-hype job since hiring that IR firm in sept)

      7- has any employee of OPBL ever served as an officer at another public company? the cfo i think is 33yrs old and from what's listed on his bio seems to have very little relevant experience that would warrant him being cfo of a public co that ahs an enterprise value of almost 200mm !!!

      8- in may, OPBL authorized a share repurchase program of $200k (stock was less than $1 at the time!!)- yet as of the most recent filings, OPBL has only repurchased a pitiful amount of $2500!!!! does mgmt or the board feel the stock is overpriced??? maybe they are on to something, i mean OPBL ev is almost 200mm!!! for a measly 18mm in annualized revs and lots of red flags in a business where they have ZERO value-add or edge over their competitors!!)

      9- has anybody actually reviewed the compensation package of the ceo; can anybody remember seeing such an outlandish structure, esp for a company this size!!! the ceo gets ~$350k in salary, but get this, he will receive 5% of all gross revenues in addl cash comp!!! this is amazing! but it gets better- he will receive 2% of gross revenues in stock options!!! so basically, existing shareholders are getting double-diluted for every incremental revenue dollar that OPBL generates!!! it stuns me that the board had the audacity to approve this package, though considering all the cronyism involved in this company, and all the conflict of interest issues, i guess it shouldn't surprise me

    • 2- has anybody actually spent any time researching "OPEX" and what it really is? can anyone here actually say what it is? from reading the sec filings (10qs, 10ks), one would know this, OPBL has spent ~800k over the course of the last two yrs on "r/d", presumably to develop this "trading platform"; upon reading further, one would see that apparently, the manpower involved consisted of two "consultants"; let me ask you, does it really seem likely, or at all feasible, that for 800k and using two consultants, OPBL could develop some type of "revolutionary" platform (OPBL hasnt described it as revolutionary but several of you board posters have)- where does common sense come into play? big firms like goldman, jp morgan, merril etc all spend millions and millions of $$$ per annum on developing, maintaining and upgrading very sophisticated platforms for trading options and deriviatives (not too mention great amounts of man power/labor); is it reasonable to think any substantial buyside players would choose OPBL over one of the many established firms that already exist- and happen to have far superior techonolgy, a far superior set of trading standards and more than likely much better pricing? i mean people, really !!! i have yet to speak to a trader who has heard of OPBL or "OPEX"; a bear would say this is negative as it means that nobody of substance is doing business with them while a bull would say this is great because it means their is just more market share for OPBL to grab- but ask yourself "why would anybody of substance begin trading with OPBL given the many alternatives and the issues raised above"; i think "OPEX" is just a way for OPBL to take orders from their customers in electronic fashion as opposed to the current phone orders they do

      3- has anybody even heard of their auditior? have u googled their auditor and gotten any sense of confidence in the reliability of the underlying acct and accuracy of the reported #s ? can any of you name another public company (i mean ANY public company!!!) that uses this auditor??? i would ask ppl, why in each release of the monthy trading data, the level of disclosure varies and changes and is never consistent? isnt that at the very least quite odd? that isnt how other companies who report monthy or qtrly stats do it- they report the same categories, month after month, qtr after qtr, so you, the investor, can get an accurate sense of the progress and shape of the business; that doesnt seem to be happening here at OPBL (if anyone has actually bothered reading the text of these releases); i would also ask, have any of you noticed that the amount of disclosure has shrunk considerably? look at how little info was given for the dec stats vs that nov release- and then look at the oct release

      4- has anybody actually read the sec filings and questioned the obscene amount of self-dealing going on inside this company? here are a few examples a) OPBL leases a floor seat on nymex from the father of the OPBL chairman/founder b) the chairman is a managing director at 3 different OPBL customers c) OPBLs two top officers (the ceo and the president), co-own CES, which is OPBLs affiliate for floor brokerage ops d) OPBL manages the administrative side of something called "sleepy hollow coffee roasters", a coffee shop co-owned by (guess who!) the OPBL CEO and the president e) proceeds from the ipo went to sellers, with none going to the company, yet OPBL took on debt from (who else!!) the ceo and the chairman at 12% interest rate to fund operations (including the deal w CES, which as mentioned earlier, is co-owned by the ceo and the presdent!)

      • 2 Replies to not_hype_truth
      • 2)

        Copy this link into your browser and hit enter. Then click on the fact sheet. Scroll down to the Company Highlights section and read the Significant barriers to entry - FIRST ELECTRONIC OPTION PLATFORM TO RECEIVE CLEARANCE FOR TRADING ON THE NYMEX.

        "big firms like goldman, jp morgan, merril etc all spend millions and millions of $$$ per annum on developing, maintaining and upgrading very sophisticated platforms for trading options and deriviatives"


        These guys aren't competitors with Optionable. In fact, if you will read the fact sheet then you will see that JP Morgan, Merrill Lynch, Bank of America, etc. are actually Optionable customers.

        OPBL just got clearance for its OPEX system this past spring and just started using it on June 18th. They are the only electronic option trading platform on the NYMEX. Can you say, drum roll please, Mo....Mon..........Monopoly!

        You are so full of crap. You come prowling around hoping to pick up cheap shares. This train has left the station either get on board, sell this baby short (we will enjoy running you over), or shut your mouth.

        I've already destroyed your first 2 objections to this stock and some others have sprinkled in some other facts. I've uncovered you for what you are and now I'm through with you. And you aliases too.

      • peter_norths_proctologist peter_norths_proctologist Jan 12, 2007 5:37 AM Flag

        Re: has anybody even heard of their auditior? can any of you name another public company (i mean ANY public company!!!) that uses this auditor???

        huh? Shelb & Co. audits 50 public companies according to their website. Two of which I found are SMVD and JPCI. How come I can find them but you can't? I thought you were the master of DD.

    • guys- i apologize- i have never before posted on yhoo but i feel compelled to now do so; i apologize in advance if some of this seems didactic

      i will start by saying that made money long on this from ~1.60 to around i did like the underlying basic stuff most ppl here seem to like (rapid rev growth, profits starting to ramp, hype around exchange stocks, potential for exciting new product launch)

      well, the reality is that i have spoken w mgmt and done a good amount of dd, reading every sec filing theyve published, building a detailed model out till 09 and also talking to energy traders at large hedge funds in nyc, chic, san fran and boston along with deriviatives brokers on wall st

      after doing all this (i admit, i did buy before doing all the blocking and tackling and digging because the price of the stock and the apparent story were very compelling- it had all the makings of a stock that could be easily hyped and that would have a huge following on boards like this and with retail/common investors in general- so it was clear there was a good chance that quick, decent money would be made as their new IR firm did the typical hype job and as newsletters spit this thing out etc)

      well, i sold after doing the above mentioned research and made a nice profit, though clearly, at least if judged on today's close, way too soon!!!

      congratulations to those of u who have made money here
      but lets look at reality for a minute as it appears there are some basics that nobody has bothered mentioning and that, when thought about clearly and not under the intoxication of a rapidly rising stock price, would at least give holders and new buyers pause- and if rationally analyzed, would likely make u think hard about selling the stock, or even going short

      i call the following 10pts of sanity

      1- is anybody aware that THIS IS NOT AN EXCHANGE STOCK!!! THIS IS A BROKERAGE STOCK!!!! i understand the current sex appeal around exchange stocks but using these as your comparisons are foolish given there is ZERO in common with an exchange stock and OPBL; when doing your valuation analysis as to what multiple is appropriate, one should look at a list of brokerage stocks, not exchange stocks!! this is obvious to anybody who has bothered actually reading about what the company actually does; brokerage stocks have much much lower valuations and multiples than do exchange stocks

    • dalton,
      thanks a lot for ur analysis..the next Qtr is key..if they make 0.07c, Im doubling down..

      I dont have any doubt we will hit 10 be4 the year is over..being very very conservative :)

      good luck to u..