As I always say, anything is possible and no one knows the future. However, I think with the company still ramping up and very much still in a start-up phase (even though operations are up and running already), earnings per share for Q1 and Q2 will be on the light side. In my opinion, the progress will be stellar by mid next year, however we cannot have unrealistic expectations. Let's first see the company get up to EBITDA $1M and then on to $2M in annual earnings, then we can talk about the potential for $5M, $10M and $15M+ into the distant future.
With the share structure the way it is right now, at 1.44B, even if we assumed the P/E multiple was an extremely high number of say 100, then for RFMK to be fairly valued at $1.00/share the annual earnings would have to be around $14M. I think that is way out of the ballpark for now. I think its probably a bit more reasonable to imagine at first, EPS could be about 10X lower than that figure, so maybe about $1.4M in annual earnings for the very first year of profitability, which would be great for the company and shareholders and it would really show management has a winning formula for the business plan. That would bring about a stock trading at about $0.10/share. I think at the other ridiculous extreme would be to divide by 10X once more, and to only value the shares at $0.01/share, which would mean very little earnings of only about $140,000 for the entire year. I think that would be way too low of an estimate for RFMK's first year of revenues. We have Cheryl S, GotVape, multiple store locations, internet sales, celebrity exposure, etc. I think revenues could be much higher than that by this same time next year. If you assume then a kind of mid way point between the two valuations, to be moderate and conservative, I think it comes close to about $0.05/share, which is where I personally think the stock is going to go during the next few quarters.
Now, granted, this is all assuming decent sales and revenues, nothing outstanding but nothing shabby either, so I think its reasonable, and it also assumes the share structure stays at 1.44B, which is no guarantee, either way; the company could take strides to buy back and lower the O/S which would support EPS, or they could still have the need to dilute to raise capital for operations in future quarters and the O/S would get larger. No one knows but I happen to think that $14M is too high an estimate for earnings and I also think $140,000 is way too low an estimate. In my mind, the first major hurdle for the company will to earn more than $2M annually from sales. If they were to decrease the share structure, get uplisted, make over $2M in earnings and have a rather large investor base, then who knows, maybe in a year or longer the PPS could indeed approach $1.00/share but for anytime in the next few months I think that is a pipe-dream. Just my opinions.
GLTA
$RFMK!
