Friday, May 27, 2011
QING - Trading At An Amazing .70 P/E
Your average publicly traded shoe company trades at a p/e of 10-15, with some higher growth ones like DECK trading at a 22 p/e. QING after earning $.40 a share in 2010 currently trades at a p/e of .70. That means the stock is trading for less than what it currently earns. The only companies you will see trading for a p/e of .70 are bankrupt ones, and QING is thriving not bankrupt.
In the last reported quarter from January to March the company earned $.15 a share. Take that same EPS over the rest of the year and you get an annual EPS of $.60 a share this year, a 50% growth over last year. If you are a forward looking investor, like most intelligent investors, than that $.60 figure makes this stock even more undervalued than it currently is.
To put it into perspective, take a very conservative p/e of 10 and take QING's latest reported EPS for 2010 of $.40 anf you get a $4 stock. Look forward to the possible $.60 EPS for 2011 and you get a $6.00 stock.
QING is planning on opening another 170 stores in 2011, so factor in the growth there, as well as continued growth from existing stores and the p/e for QING should be in the 15-20 range. If you use a 15 and 20 p/e for last year $.40 EPS QING's stock should be trading at $6.00 - $9.00 a share. Use the projected $.60 EPS based on the last reported quarter and QING should be trading at $9.00 to $12.00 a share.
Funny thing is this stock did trade for $8.00 a share only a few months ago. Since that point the stock has sold off, and I don't think the sell-off has to do with the company financials, but more likely old shareholders and the sellers of the shell. I do not know what has gone on behind the scenes, but what I do know is that the financials for this company are impressive and with it's low outstanding shares I think the stock will start to trade higher when investors start seeing the value here.
The company has also started rewarding its shareholders with a dividend, which will be coming each quarter this year.
With penny stocks there are so many that slip through the cracks. You see a stock fall you figure it is good for a bounce, but you never figure to find such a great company hiding behind such an ugly chart... and that is what I think we have here with QING.
Based on the company's current and future earnings per share this stock has a long way to go in representing the true value of the company.