EV and FCF best measures I'll start by saying that risk averse investors, that being institutions, big money and smart money investors look for two consecutive profitable quarters. Cardinal rule for ROE investors.
The September presentation shows VLE well below peers using EV. A guesstimated projected EV assuming US$500 million market cap and US$200 million cash with no debt would be US$300 million. Compared to EBITDAX of an annual estimated US$400 million without Wassana, the ratio is 3:4 or .75... when peers are sitting at an average of 2.1 according to the presentation.
To put it into perspective, VLE should be around 3 times US$500 million market cap in the short term as more earnings reports come in. Even at US$500 million, that's CAD$675 million market cap or a $6.75 share price, close to the Auctus target. Triple that to bring VLE up to peer level... and that's without Wassana.
Using 2 x estimated FCF of US$200 million, we get US$400 million market cap, CAD$540 million and a $5.40 share price.
Enter Paramount. It's said that Paramount is attractive at 4 times FCF and 22 cents of profits for every $1 of share price capital. It does come with a 5% dividend. Regardless, with VLE growing, 4 x FCF is a good guesstimate.
At 4 x FCF, we get 2 x $5.40 = $10.80 a share. Using ROE of say 25 cents for every $1 of share price capital, we would have a US$8 share price or CAD$10.81
Hard to tell which angle investors are looking at. 4 x FCF vs double or triple EV to match peers. Clearly either way, VLE is still ridiculously undervalued. Short term SP should be north of $5, anywhere between $5.40 and $6.75 and next year's SP, over $10. We may even see $15 to $20.
And that's without Wassana. This is why the stock is going up.