it all depends on the difference between cash flow and interest.
at the moment cash flow is larger than interest, and all acquisitions so far have added to earnings and cash flow.
I think in some states they are about 10%; what they need to do next is generate operational efficiencies once they have scale...
would be interesting to see if they have seriously considered ways to lower the labor costs by pooling labor, and merging back office operations, cutting procurement costs by bulk sourcing.
if they cant then yes... it will drop like a stone and be valued somewhere around 10 times earnings (40m) or 10 times cash flow (120m)
GXL Price at posting:
$6.55 Sentiment: None Disclosure: Not Held
