EARN – It seems good news is all we have for this week, earning reports are out on many of the companies and all have been above par, with some being fantastic. EARN released earnings yesterday and recorded a 45% increase in net revenue. The dividend yield on a standard forward looking basis has this company at 15% on reported numbers. The profit margin on gross income for the last three months have been 42% in May, 42% in June, and 47% in July. This shows us that not only is EARN’s business mobile scalable, there have been no diminishing returns to this point. Leaving reason to believe that growth in this company would directly lead to increase in net revenue and increased dividends. The CEO said his self that he was surprised at how well things are going for the company, considering the summer months, and he is inspired to try and have the company perform even better as Second Life picks up steam leading into Q3. At this price, EARN is undervalued by L$2 to L$3 a share based on dividend. If you calculate for earning however EARN is only under Valued by L$ 0.50 to L$1.5 a share. This means, you will not be disappointed if you buy higher than current price. But one bad month will lead to wild price swings downward. Expect to see it drop buy L$0.50 to L$1 if a bad month is reported, and the company is over L$4 a share. Target price is L$3 a share until the end of next month to see if the earnings can truly be sustained.
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