“The stock is currently trading at a PE ratio of ~50; and in order to increase valuation, it will have to demonstrate that it can maintain a growth rate of at least 70% yoy for next 4 to 5 years.”
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I think this statement (above) is somewhat of an exaggeration. Let’s say we accept PE is currently around 50 (forward PE will be more like 40 at yr end, imo)....
So SP at $11.77 divided by 50 gives earnings of 23.5c per share.
If EPS grows at 70% for 4 yrs you end up with earnings of $1.96 per annum. So, even if our PE were to fall right back to 20 in 4 yrs time, our share price would would be in the $40 region. I hope you’re right about growing at that rate, I think you’ll find that growing at 30% is more than enough to justify this PE.
A2M Valuation, page-16
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