Tuesday, August 7, 2007

Dot Hill Systems Corp.

Dot Hill Systems Corp. is a NASDAQ listed security that has been trading in a range between $3.01 and $4.44 over the past year. With 45,582,860 shares outstanding, a recent price of $3.73 gives a total market capitalization of $164,326,211. While there are certainly larger companies, Dot Hill Systems Corp. has definitely earned its place in the pack. Last year, Dot Hill Systems Corp. created $-1.82 in earnings for every share outstanding.

Dot Hill Systems Corp. 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, Dot Hill Systems Corp. is unlikely to be an interesting value proposition. Consistent earnings are the key to high valuations and this security is not on its way.

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