Thursday, August 9, 2007

Isilon Systems Inc.

Isilon Systems Inc. is a NASDAQ listed security that has been trading in a range between $9.12 and $28.50 over the past year. With 61,696,940 shares outstanding, a recent price of $9.26 gives a total market capitalization of $588,588,805. While there are certainly larger companies, Isilon Systems Inc. has definitely earned its place in the pack. Last year, Isilon Systems Inc. created $-0.34 in earnings for every share outstanding.

Isilon Systems 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, Isilon Systems 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.