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Vringo's Huge and Obvious Upside Potential

|Includes:FORM Holdings Corp. (FH), GOOG

Vringo (VRNG) has won a definitive victory over Google; now what? Let's look at one possible method of valuation. With their ongoing 3.5% royalty rate, Vringo stands to receive payments of about $150 million per year for the next four years. Subtract applicable taxes and operating expenses, and we can conservatively say that Vringo will take home about $100 million in cash (this is strictly from the (NASDAQ:GOOG) settlement) per year. $100 million divided by Vringo's 33 million shares outstanding yields an EPS of $3.03. Now take that EPS, and multiply it by the average P/E of Vringo's sector applied technology, which is 17, and you end up with a rudimentary PPS estimate for Vringo. That number? $51.51 per share. I don't know about the rest of you, but I struggle to see how this stock could go anywhere but up.

PS, before anyone tries to say i am just trying to pump the stock price, go over my numbers yourself. They are accurate and represent a factual means of approximating PPS.

Disclosure: I am long VRNG.

Stocks: FH, GOOG