re: instos not selling PART DWhat is this company worth?This is...

re: instos not selling PART D

What is this company worth?

This is complex due to so much of the value in this stock being "classified" and relying upon future funding. Basically the only way to do this is to look at what people have paid in the past, by reviewing company comment and past performance, and by valuing the expected revenue for 2007 from the other business units.

Space Tracking is difficult to value as most of this is classified, however in January 2005, Northrop paid $22 million for a 10% interest in the "Space business" of EOS (as this was and still is, their only interest in EOS). Since this time, EOS has had further success in their “NEOT space tracking" tests initiated by the US Air Force in mid 2005 and since then no further comment has been made. The Space division would therefore need to be valued at at least the $220 million Northrop were prepared to pay in January 2005. As mentioned, EOS has spent $50 million developing this technology over the last 10 years. (Rumour has it that Northrop actually offered to buy the whole of EOS back in January 2005, yet management were not prepared to sell at levels even in excess of what Northrop paid for their 10% stake, indicating management saw high future potential.)

On the Military side, "CROWS" alone should have revenue for 2007 of around $95 million which will likely increase to around $120-$150 million by 2008. Margins on this business at full capacity are forecast at around 15%. If we conservatively value this on 2007 earnings alone and assume earnings equals valuation (as a worst case as you would be selling it on 7 times 2007 earnings?), this unit is worth around $100 million. Telescopes etc is due to earn around $20 million for 2007 also.

Basic Valuation Value Valuation Method
Space $220,000,000 Northrop’s 10% state price
Military-CROWS $100,000,000 Valuation = 2007 Revenue
Telescopes $20,000,000 Valuation = 2007 Revenue

Total $340,000,000
Shares/Options 56,000,000
Valuation per share $6.07