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Re: BMO on IAE - Target price is too conservativeThis BMO value target looks very low to me. Here’s my thoughts on valuation using BMO revenue and cashflow estimates BMO cashflow = $303 Mil and I think this is USD IAE shares out = 413,932,372 (Jan.9th) Cash flow per share = $303,000,000 / 413,932,372 Cash flow per share = $0.73 USD Convert to CDN using $1.30 CDN = 1 USD Cash flow per share = $0.95 CDN Before the price of oil collapsed, Ithaca would trade at 3 X CF in bad times and 5X CF in good times. 0.95 sterling = $1.50 CDN which is a super low 1.58 X CFPS. Far too low a multiple…. In my valuation of IAE, I think IAE is worth at least 3 X CF with $600 Mil current debt but should be given a higher multiple based on YE 2017 debt of $400 Mil. IAE has set their Capex budget around $70 Mil. Barring any acquisitions, IAE has $200 Mil + to pay down debt and deleverage their balance sheet. The market will ultimately decide the share price but I think a multiple somewhere between 3-4 X is right sometime after Stella reaches full stable production 2 x $0.95 = $1.90 3 x $0.95 = $2.95 4 x $0.95 = $3.80 5 x $0.95 = $4.75 If the Revenue estimate was in CDN from the beginning which I don’t think but to be super safe… 2 x $0.73 = $1.46 3 x $0.73 = $2.19 4 x $0.73 = $2.92 5 x $0.73 = $3.65 I’m long the stock and think the BMO target is woefully conservative. Good luck |
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Msg # | Subject | Author | Recs | Date Posted |
5687 | Re: BMO on IAE - Target price is too conservative | SIR COOP | 3 | 1/15/2017 5:42:29 PM |