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MERUS LABS INTERNATIONAL INC T.MSL

"Merus Labs International Inc is a specialty pharmaceutical company. The Company acquires and licenses novel pharmaceutical products."


TSX:MSL - Post by User

Post by BillyBufford155on Dec 21, 2016 2:07am
225 Views
Post# 25628321

Valuation Attempt for MSL

Valuation Attempt for MSLThis stock has really gotten beaten up. I know it was really hyped up when it was raising money (surprise, surprise...?). During the last earnings call, the management seemed to offer a clear strategy on how this company is going to get its debt under control and start earning an actual EPS. (Also, I agree, this misleading EBIDTA measurement used by management should be replaced with EPS, as others have mentioned in posts before me.) Anyhow, how are you valuing this company? Here's what I'm thinking: If they have about $140 million in debt, and are earning around $55 million EBIDTA a year less $8 million in interest payments that means they can pay off debt at around $47 million a year (or slightly less given their negative single digit revenue growth per their last conference call and assuming they can make $55 million EBIDTA a year and not disappoint like they have recently). This means they could pay off debt in around 3 years. And I assume earn around $40 million a year for awhile after this. This is around $40 million /120 million shares = $.33 per share a year. With a 5 multiple that would give around $1.65 share price, not including any further drug purchases made by the company. Of course, this is if the management can carry out what they were saying on their last earnings call, and not revise it downwards like it has in the last several. Any thoughts?
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