The AEM information in here states $10M revenue, with $2M earnings.
The Delta contract is supposed to generate $7M revenue, with a very high profit, so I said $6M.
All up, $17M revenue, $8M earnings. Thus my comment regarding a price/earnings ratio of 20 putting us at about fair value. If we use PEG, we are assuming a 20% growth rate, and I am more than happy with that assumption. If we are going to run higher than that, let's have a year of proof first.
As you noted, they are forecasting revenue to be higher, with the comments in the second dot point about improving the AEM legacy platform. That's fine, and I would expect no less with new management and more resources, but I would prefer to see the evidence of that improvement before it starts being factored into the share price. The number they have given is around 10%pa over three years, so that means that CVM needs to generate the other 10% growth. May be a shoe-in .... but we just don't know.
This was my point above - that new contracts, growth in the legacy business, widespread uptake of CVM across multiple airlines, beginning of CVM utilisation into rotor aircraft will all come in time, and the share price will improve to match the earnings generated by these things.
I am happy with the recent announcements. The Delta contract took a long time to finalise, and that took a lot of wind out of the sp, but that was to be expected. The AEM takeover was a surprise, but it is one of the few times that a takeover announcement has left me feeling confident about the immediate future of a company.
Perhaps this will all result in a large future expectation and an inflated share price, but the boys at the top are carrying a bit of baggage that may temper that growth (at least in the short term).
SMN Price at posting:
$1.53 Sentiment: Buy Disclosure: Held
(20min delay)