NASDAQ:FMTI
$0.27
(2/9 10:10AM)
| Open | $0.27 |
Mkt Cap | $1.3 Million |
| High | $0.28 |
52Wk High | $0.87 |
| Low | $0.27 |
52Wk Low | $0.07 |
| Volume | 22,759 |
Avg Vol 10D | 27,600 |
A Word Of Caution
Stocks trading for less than $1 are loosely termed "penny" stocks. Forbes Medi-Tech, Incorporated (FMTI) is selling for less than $1 per share. While we stand by our ratings methodology for long term value investors, often times "penny" stocks can be more volatile. Because many "penny" stocks are lightly traded their stock price can fluctuate because of a single large trade. Also, there is generally less analyst coverage of such "penny" stocks and thus less information from which to base our rating.
While this company may not get as much press because of its low stock price, please take a moment to look at the RazorWire feed on the right hand side of the report. Each time Forbes Medi-Tech, Inc. is mentioned on business television or influential blogs recently should be displayed. This helps to bring you up to speed on any major issues they are facing right now.
Therefore, (and as always), check additional sources and available information regarding Forbes Medi-Tech, Inc. before making an investment decision.
Ockham's Rating/Recommendation Summary
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FMTI Revenue
As a value investing shop, we are interested in seeing how FMTI's revenues measure up against past performances. One easily understandable way of doing that is to compare Price to Sales per share levels over a given time frame. Assuming it is available, Ockham prefers to look at ten years of history (for this stock there are 10 years of history available) and we weigh recent years more heavily. This allows us to find weighted average historical high and low Price to Sales ratios, which give us a better idea of the stock's current underlying value. Using this method, we have established a high range for Price to Sales of 13.73x and the low end of the range at 3.29x.
With respect to these historically rational metrics, notice that the current Price to Sales per share ratio for FMTI of 0.60x is well below its normal historic Price to Sales levels. At a price of $0.33, FMTI is 93% below where we would expect to see it. Clearly, this stock looks undervalued compared to historical levels, at least on a Price to Sales basis. This will positively affect our analysis because it is rare to find a stock this far below historical norms, and we would expect some price appreciation to bring this metric back towards a more normal range.
FMTI Cash Earnings
When there is not enough positive Cash Earnings history available for a company, we at Ockham Research can find it quite difficult to actually rate their ability to generate cash. Such is the case with FMTI. When a company has current positive cash earnings but not enough years of history to compare it to, we find the correlation of cash earnings to valuation significantly hindered. So with FMTI, we will have to wait to see if there are a few more cycles of positive Cash Earnings numbers before we will be confident in our Cash Earnings analysis.
FMTI Dividends
A strong dividend payment history is looked upon as a favorable characteristic on a company’s future and potentially can receive a positive Ockham rating. That being said, we don't require dividend payments for company's whose management has elected to forgo them entirely. FMTI may pay a dividend at this time; however, there is an insufficient amount of history to incorporate it into our analysis. Therefore, we are not utilizing the dividends or lack thereof in our study. As FMTI more consistent dividend history is made available, we will begin to factor this into the Ockham approach.
