knowing the industry before you invest, page-3

To the FAs out there, what are your thoughts on the following?

NMS H1 results is $13M less than last year's. This implies the eps impact is approx. -3c ps. Consequently, the sp dropped 60c-47c=13c.

From the PE perspective, the sp drop created a reactive (marginal?) PE of 13c/3c = 4.3. Yet, the current PE is 7.3, which implies that the shares are oversold by 13c-4.3/7.3x13c=5.4c. In other words, the current PE places the sp at 47c+5.4c=52.4c.

Alternatively, the current PE of 7.3 implies that the market anticipates NPAT of 47c/7.3=6.4c ps for H2. But at NPAT of 6.4c ps, the return is very good, indeed. Therefore, should NMS deliver the expected H2 results, the sp will appreciate accordingly.

I haven't fully thought through the flaws in this analysis yet. Please feel free to disprove using FA. Ta!