Tuesday, August 7, 2007

National Security Group

National Security Group is a NASDAQ listed security that has been trading in a range between $15.32 and $19.87 over the past year. With 2,466,600 shares outstanding, a recent price of $17.00 gives a total market capitalization of $44,398,800. While there are certainly larger companies, National Security Group has definitely earned its place in the pack. Last year, National Security Group created $2.26 in earnings for every share outstanding.

National Security Group is currently priced by the market at 7.30 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 in excess of $1 a share, National Security Group is unlikely to be an interesting value proposition. Consistent earnings are the key to high valuations and this security is well on its way.