Thursday, August 9, 2007

ISTA Pharmaceuticals Inc.

ISTA Pharmaceuticals Inc. is a NASDAQ listed security that has been trading in a range between $5.19 and $10.74 over the past year. With 26,612,060 shares outstanding, a recent price of $6.64 gives a total market capitalization of $183,357,090. While there are certainly larger companies, ISTA Pharmaceuticals Inc. has definitely earned its place in the pack. Last year, ISTA Pharmaceuticals Inc. created $-1.51 in earnings for every share outstanding.

ISTA Pharmaceuticals 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, ISTA Pharmaceuticals 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.