What are you idiots afraid of? Dear god. That straight might have a concern about a small cap stock and he or she hasn't posted on yahoo boards? Even if he is short do you really think that he persuaded that much money to leave this stock? And if so, do you really think you stopped it by posting your two cents? Wow. thank god you posted that response, otherwise someone would have sold and the stock would be down another 3 cents today.
7x sales is certainly expensive unless earnings picks up considerably. I believe I remember Petit mentioning that earnings would start to show improvement in 2014? Is it unreasonable to expect $25m in earnings on $125m in sales (both annualized at the end of 2014)? If so, the PE multiple could be around 30x - 40x which may be cheap given the international growth potential, epifix potential in the united states and amniofix potential. Nothing is ever a given in this world but it certainly seems as if the company just needs to grow into its stock price a little. My guess is the stock price will rally when the company gives investors a better understanding of what that growth picture looks like and some uncertainty disappears as noted above and in the other posts. All in time.
Thanks, Frik. Despite the unnecessary critique of my intelligence, I appreciate the post and the education. I have not studied the depletion curves of oil wells and clearly need that to swim in these waters. Will do so asap.
Thank you bondsman. I'm fairly new to this industry and did not realize that the decline curves were sooooo substantial. Is it right to assume all of the capex in 2013 will last one year (or thereabouts)? Do we have inisght on this - I read the 10k and 10Q and didn't see that detail but clearly is very important to valuing the business. Does the company provide insight on this somewhere? Again, thank you for your insight.
I'm clearly simplifying here but isn't the cash flow for 2013 going to be around $500 million? And given the increase in oil production (and no change to the oil price) can't we expect around $640 million of cash flow in 2014? Assume all the capex is almost entirely growth capex and put it aside - management wouldn't continue to invest if the investment didn't offer a better return than paying down debt, right. What i'm left with is a company worth $4.5 billion ($3 billion debt and $1.5 billion in equity) producing cash flow of $640 million. That's about a 14% rate of return - not bad. And this assumes no other assets which we know is very conservative. I'm a buyer. Management is experienced and knows what they have to do now which is to cause operating cash flow to continue its ascent and to slow capex down. We should start seeing this in 2014 and the value will become obvious. Yep, oil prices could fall substantially - possible but i doubt it given mideast #$%$ and an improving world economy. so, beat this up. what's wrong with this?