Based on this morning's analyst conference call and a discussion with management, I have increased my 2010 estimate to $168.4 million in revenue and $1.66 in EPS. I am introducing my 2011 estimate to $210.6 million in revenue and $2.12 in EPS.
Based on today's closing price of approximately $8.75, Gulf Resources is trading at 6.8x LTM EPS and 4.6x LTM EBITDA with a PEG of 0.23. Given that the comparable companies are trading at 15x-20x LTM P/E (ICL Group and ALB) and applying a discount, I believe GFRE should be trading at 12x-15x LTM P/E. Based on 12-15x LTM P/E, GFRE is currently worth $15.35 to $19.19 per share currently. My 6 month price target is $20 to $25 per share and my 12 month price target is $24.50 to $30.50 per share.
Below are my detailed assumptions for the next 6 quarters. You can read more about my commentary at Seeking Alpha:
