You are pulling figures out of the sky and presenting them as fact. If you care to look at the annual reports you will find some facts. For example, in 2000 div of 2 cents; 2001 div of 3.5 cents and 2003 a div of 5 cents.
If you care to look at the financials you will also find out that the earnings that were generated last year had an income tax benefit. Next year the company will be paying a full corporate tax rate. By reading the financials you will also find out that the company structure has not really changed too much - even after its acquisition. Consequently, the financial ratios such as profit margin etc can be assumed to be relativly constant. If you do some financial statement analysis and not use hype or hearsay you will find out that the expected earnings for next year (unless there is a major acquisition) will yield a dividend of about 6 cents per share. On a market price of $1.50 odd this will yield about 4% and on the $2 that you are projecting 3%. The underlying value of the company is $1.20 and the added 30 cents per share is the premium for that big IF - that is 20% of the market price can be attributed to speculation of future events - and not only one year but a two year horizon.
The current price of $1.50 puts expected earnings at about $13.9m or a 55% increase from current. That would equate to sales of about $200m. I am not saying that this is not feasible. The issue is that it is speculation that the company can increase earnings by 55% and particularly without an acquisition. Using the same line of argument a $2 market price would equate to sales of about $300m or a leap of 129%.
These figures do not appear to have any congruence with forecasts - even the CEO has forecast a growth (modest in comparison to the expected 55%) of 10% for the year.
If the price does reach $2 I congratulate you. But it is beyond my risk profile.
I do not own.
FUN Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
