OTCPK:EMMBF - Post by User
Comment by
Mamalikespieon Jan 11, 2019 12:12pm
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Post# 29219179
RE:With ALEF climbing like it is....
RE:With ALEF climbing like it is....I see the price should be around, 1.5 - 2. If the ALEF deal wasn't a thing, I would have said that emblem should be going to 2-2.7 by Q2, just on sales. I was expecting them to miss their 80m sales target, but have minimum 40m in sales, which makes a forward P/S ratio of around 4, reasonable for this industry. This would be what they should be valued at by Q1, once they have demonstrated some ability to achieve significant sales.
ALEF adds a lot more risk, and now emblem's price is hamstrung at what 0.837 alef shares are. ALEF has 'sales targets' of 80m in 2019 just like emblem, but a price premium. I'll let you do the math.
Emblem's SP has nothing to do with the 1.21 price of the acquisition. Investors need to realise that it's a ratio of ALEF shares not a dollar amount, but psychologically i'm sure there is a 1.21 value barrier now. Also, EMC is trading at a fraction of the 0.837 ratio of EMC:ALEF because the market is discounting the significant risk that the merger will not go through. This is incorrect because if the merger isn't going through it should just not matter. Finding disparities in valuation metrics is the only way to make money on the stock market, use them.