Wednesday, August 1, 2007


1-800 CONTACTS INC. is a NASDAQ listed security that has been trading in a range between $13.18 and $24.34 over the past year. With 14,009,590 shares outstanding, a recent price of $23.29 gives a total market capitalization of $326,423,436. While there are certainly larger companies, 1-800 CONTACTS INC. has definitely earned its place in the pack. Last year, 1-800 CONTACTS INC. created $-1.84 in earnings for every share outstanding.

1-800 CONTACTS INC. is currently priced by the market at 0.00 times last year’s earnings. Many trading multiples around the world are quite attractive these days, but don’t be fooled. A Price to Earnings ratio of 0 simply means that the security didn’t make any money last year.

With a share price under $50 a share and earnings per share below $1 a share, 1-800 CONTACTS INC. is unlikely to be an interesting value proposition. Consistent earnings are the key to high valuations and this security is not on its way.