pe ratios 101

Well no surprises that they raised the $60m in my opinion. When retail investors get emotional instos show no emotion just cold hard facts and decisions based on financials. These "new" investors have just brought shares for effectively a PE ratio of 4x EBIT.

So when the $20m EBIT numbers come out and these guys win more contracts at their normal 40% margin the instos should reward these guys with a multiple closer to 15x EBIT. So assuming NMS can generate $30m in EBIT at a multiple of 15x then it should have an MC of $450m and with 2b shares on issue it should be trading back at $0.225 and all the retail guys would have missed out on 3x their $0.05 raising entitlement.

I think when it starts trading their will be some retail people cutting their losses but I also think you will see instos buying upto around $0.10 but more likely it will sit between $0.06 and $0.08 until they can show a turn around. As soon as the market sees costs coming down and margins expending with new contracts the instos will pile back in. My tip is that by June it will be over $0.10.