Yea this is a tricky one. Revenues are 36.5m however investors are probably going to factor in reduced motorsports activity. Lets be conservative and say forward revenue is 30m. A business like this with a 35% gross profit margin can probably achieve a return on equity of 7-10% as a base case scenario if they continue to turn things around. That equates to 2.5-3m in net profit, with low growth apply a PE ratio of 10x to get a market cap target of 25-30m.
Current market cap is 18m which says to me that the market is pricing in about a 65% chance they business progresses to profitability, and a 35% chance of stalling. Probably about right given the available information and low liquidity.
Still decent money to be made for us little guys buying here if you believe in their strategy.
RPM Price at posting:
19.5¢ Sentiment: Hold Disclosure: Not Held
