RE: RE: RE: RE: RE: Volume? What a conundrum...Hi Sposch,
You wrote:
"0.83 Lb Cu/share X ($4/LbCu-$1.30/Lb production cost) gives us a per share profit of $2.24/yr based on $4/Lb copper.
A conservative P/E ratio of 10:1 should result in a share price of $22.40.
If one were to do that calculation a $5/Lb copper as Glodman has forecast the result would be a $30.71 share price."
The problem with your math is that you have to calculate net earning before applying a P/E ratio if you use that evaluation method. To get the net earning you have substract a few thing like amortization and depreciation and then calculate the taxes that the company will have to pay on these profits.
I have two analyst reports on CUM. Jennings uses a CFPS ration of 6:1 and a P/E ratio of 10:1 to do their estimates. Haywood indicates in its August 2010 report that comparable copper producers are trading at 5+ x CFPS.
Both reports give conservative valuation of $9-$10 with copper at $4 / lbs and $13-$14 with copper at $5 / lbs.
Benvest