03-11-2014, 09:09 PM
(03-11-2014, 12:58 AM)roxhockey Wrote: Cordlife cannot be looked at on a simple PE multiple because their revenue recognition involves booking discounted revenues on cash to be received many years in the future. Take a look at the size of the non current receivables on their balance sheet to get an idea of the quantum of this - very big.
On a cash flow basis, last time I checked, the company is just positive but significantly less than an uninformed reading of the P&L would suggest.
This is not saying the company is doing something shady (after all, auditors have signed off on the revenue recognition) but you need to have a view on a) the bad debt risk on the recievables (from what I recall they take specific provisions against non performing accounts but no general provision) and b) whether the company can generate enough cash (from operations and financing) to sustain it's administrative costs and marketing expenses.
If you have a favourable view then the company might well be worth far greater than current market pricing - but either way you need to have a view and not simply look at the PE multiple.
Hi,
I dont look at P/E ratio simply. I see that their earnings not be performing so well after focusing more on marketing and the one off gain has drastically skewed the earnings. And when the one off gain is gone, it will be ugly.
I do know that their revenue is recurring but for a share to keep performing, it must have more fantastic growth which apparently now is less possible.