Originally Posted by
nextbigthing
So this all suggests to me that the market believes eventually ATM will increase profits by about 800% minimum.
How do I figure this? Lets say in a few years time things have improved in Europe, new offices gaining traction etc and MFT are returning 8%. Not unreasonable at all I believe.
Therefore to make it worthwhile investing in ATM it has to outperform MFT (or any other similar company) and to do this profit needs to increase from the current 1% return to 8% minimum. That still only brings it in line with MFT etc, not allowing for any risk that it might not make it.
So the market must collectively believe profit growth will be say 900% over a few years (to justify the risk and not just invest in say MFT etc instead which is already there) OR people are buying shares hoping for growth in ATM revenue and an increase in shareprice as others are happy to accept a lower yield (eg shareprice rises to $1. Profit rises but not as fast as the shareprice so the return becomes say 5% which others are still happy to buy in to).
I'm not saying I do or don't believe ATM will do it, the point I'm trying to make it is I guess the market is currently indicating they believe growth in ATM will be at least 800% and anyone looking to invest would need to decide if they think this is going to happen.