Merrimac Industries Inc (NYSE AMEX:MRM)

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All Potential Valuation Scenarios Financials

Wednesday, July 1, 2009

Valuation Scenarios

Added to Geo Bargain on the radar list on June 29, 2009. ($7.70).

Added to Geo Bargain list on June 30, 2009. ($9.00)

Data Inputs:

Fiscal Year Ends in December

Date	06/30/09
Price	$8.47
12 Months Trailing Non-GAAP EPS ^a,b	$0.70
GeoTeam® 2009 EPS Estimate ^a,b,c	$1.08
Future EPS Growth Rate Based on Estimates ^a,b,c,d	391.0%
Trailing P/E Ratio ^a,b	12.1
PEG Ratio (P/E divided by growth rate) ^a,b,c,d	0.03

^a Merrimac is not paying a full U.S. tax rate. Therefore, all EPS numbers have been adjusted by the GeoTeam ® to reflect a U.S. tax rate of 36%.

^b Non-GAAP EPS Figures exclude certain non-operating gains and losses as well as certain non-cash items. Non-GAAP information should not be viewed in isolation or as a substitute for reported, or GAAP information . The GeoTeam ® non-GAAP figures may, from time to time, differ from company supplied figures.

^c The GeoTeam ® derived a 2009 EPS estimate by using prior revenue relationships and applying current margin trends. Over the past three years Merrimac's revenues have comprised about 20% of total year revenues. This would imply that 2009 full year revenues could approach $35 million. The GeoTeam ® derived a 2009 non-GAAP EPS estimate by:

Using the margins for the company's first quarter.
Applying a 36% tax rate.
Making non-GAAP adjustments similar to that of the first quarter.

Please be aware that the EPS estimate calculation is only an initial guide, as many other factors should be considered to derive a more accurate estimate.

^dThe future growth rate of 391% may be somewhat misleading as the company's 2008 EPS figures were depressed due to restructuring moves. Using the GeoTeam ® implied 2009 revenue growth rate of 20%, which yields a PEG Ratio of .61, may be a more realistic scenario.

Short-Term Valuation Scenarios

Date	06/30/09
Price Based on P/E of 25 on Four Quarters Trailing EPS	$17.50
Price Based on P/E of 20 on Four Quarters Trailing EPS	$14.0
Price Based on P/E of 15 on GeoTeam® 2009 EPS Estimate	$16.2

Long-Term (12 Months Forward) Valuation Scenarios

Date	06/30/09
Price Based on P/E of 25 on GeoTeam® 2009 EPS Estimate	$27.0
Price Based on P/E of 20 on GeoTeam® 2009 EPS Estimate	$21.6

Peg Ratio Analysis - Common rule of thumb that PEG ratio should be less than 1.0

PEG Ratio Less than 1?

YES

These scenarios are not investment advice, but are scenarios based on some commonly used investment guidelines. They are provided to aid investors in making their own investment decisions.

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