On our way to >$2/shareOML released its results on Friday evening. With a solid effort on cost containment, the company produced US$0.05 EPS. If you annualize the quarterly result and convert it into Canadian dollars, the company is run-rating C$0.26 EPS. Applying a 10x multiple (which is conservative given the company is growing quickly) gets you to a $2.60 valuation.
The best part -- this is really only the start. While the company is projected to generate revenues of $8 million in 2015, I believe it'll be able to grow to $10 million next year (and $12 million next year). Everything outside of military has been relatively flat this year, but that'll change in the next 3-6 months. Every $1 million of incremental revenues should translate into approximately C$0.06 EPS, or at a 10x multiple, $0.60 to valuation. If effect, OML could be trading close to $4.00 by next year.
I also expect to see the company initiate a dividend. Cash flows were weak this quarter and the business will require cash on hand to grow, so that dividend may only be initiated at the end of this year. Definitely worth added at these levels.