RE:RE:RE:Bright spot? Insider buy!Not according to the MD&A, it won't maintain. I highly doubt the stock will trade at $2/share in 2019. We'll see at best $1-1.25 IMO.
Management said they will equip 8,000 tanker cars in FY2018, which will generate $12.5M in revs or $1,500/tanker car.
For 2019, they guided 10,000 tanker cars to be equipped or 25% YoY growth. Revenue per tanker car will not increase in 2019 because their other products are still 2 years away from being AAR approved.
Assuming the company earns $1.5-2M in 2019 and you give it a 25x earning multiple, it will trade as high as ~$1.10. I don't even think it's fair to value the company at PE ratios above 30-40x even if they end up growing faster than that in FY2020 (Which I doubt) because ultimately the business is a cyclical one -- eventually the tide will turn and they'll be equiping less tankers, albeit with more products approved, at least their revenue per tanker car will increase over time. Furthermore, I think it will take lots of time for the company to generate sales from all the new products they're developing outside of the tanker car market, and there's no guarentee they will be successful. Gaining traction in new markets is almost always very time consuming.
radman17 wrote:
I agree flyguy. I just bought some more at the current price. If they can maintain the momentum of revenue increases (which I expect they will), 2019 should generate over $20 million in revenue. I believe the fundamental value of the company at that level of revenue would be over $2 per share - or about a 400% increase in share price from current levels.