There has been alot of talk about multiplers, whic
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(Total Views: 749)
Posted On: 09/05/2019 9:16:46 AM
There has been alot of talk about multiplers, which you allude to in your post. Basically, the multiplier that is being talked about is called the Price to Sales Ratio, which is a way to determine whether a stock is under or over valued based on the market cap of the company to its revenues. One can then judge the Price to Sales Ratio of the company you are evaluating, against other companies in the same sector. Companies that have or are perceived to have a faster or higher rate of growth than others are afforded higher Price to Sales Ratios. First, some definitions:
Market Cap = Price per share x Outstanding shares
Price to Sales Ratio = Market cap / Annual projected revs
So now that we know what people are talking about, let's take a look at how Verb's Price to Sales Ratio compares to that of other companies. I ran some numbers on a group of behemoth tech companies, and then some companies in the SaaS sector. I randomly picked the SaaS companies off a list of the 50 largest. Granted, these are also large well established companies, but it gives a good ides of how our stock price relates to others, and it gives a good broad overall spectrum of the group. It is important to note that I am using projected revenues for this evaluation. I also projected revenues for each company by basically doubling revs for the first half. Please see the chart below.
Just quickly looking at our Multiplier vs every other company listed, we are more than 2.5 - 3 times lower than the lowest. The average is around 12 for all the companies combined on my list and the average is 16 when looking at SaaS companies. Again, I understand we are a fledgling company in relation to the others listed, but I am trying to illustrate how undervalued Verb truly is in relation to the industry.
Personally, I find the information enlightening. But please don't take my word for it or hold the numbers in stone. It is one type of analysis out of hundreds used to evaluate companies and should be taken with a grain of salt.
Market Cap = Price per share x Outstanding shares
Price to Sales Ratio = Market cap / Annual projected revs
So now that we know what people are talking about, let's take a look at how Verb's Price to Sales Ratio compares to that of other companies. I ran some numbers on a group of behemoth tech companies, and then some companies in the SaaS sector. I randomly picked the SaaS companies off a list of the 50 largest. Granted, these are also large well established companies, but it gives a good ides of how our stock price relates to others, and it gives a good broad overall spectrum of the group. It is important to note that I am using projected revenues for this evaluation. I also projected revenues for each company by basically doubling revs for the first half. Please see the chart below.
Just quickly looking at our Multiplier vs every other company listed, we are more than 2.5 - 3 times lower than the lowest. The average is around 12 for all the companies combined on my list and the average is 16 when looking at SaaS companies. Again, I understand we are a fledgling company in relation to the others listed, but I am trying to illustrate how undervalued Verb truly is in relation to the industry.
Personally, I find the information enlightening. But please don't take my word for it or hold the numbers in stone. It is one type of analysis out of hundreds used to evaluate companies and should be taken with a grain of salt.
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