Friday, August 10, 2007

iBasis Inc.

iBasis Inc. is a NASDAQ listed security that has been trading in a range between $7.36 and $11.07 over the past year. With 33,467,840 shares outstanding, a recent price of $8.83 gives a total market capitalization of $298,864,470. While there are certainly larger companies, iBasis Inc. has definitely earned its place in the pack. Last year, iBasis Inc. created $-0.17 in earnings for every share outstanding.

iBasis 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, iBasis 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.