Earth Science Tech, Inc. (ETST) stock intrinsic value fair value estimate & owner earnings analysis

Earth Science Tech is a small healthcare company whose profits come almost entirely from compounding pharmacies (RxCompoundStore.com in Florida and Mister Meds in Texas) and telemedicine brands (Peaks Curative, DOConsultations) that feed prescriptions to them. In the year to March 2026 it sold $35.7 million of product, up 8%, at a 71% gross margin (73% a year earlier; the company cites lower selling prices and product mix). Shares trade over the counter, and the business in its current form has only two full years of history, so everything here rests on a short record. How we measured earnings. We start from operating cash flow, strip out swings in receivables, inventory and payables, and deduct the portion of capital spending needed to stand still. The company pays no stock compensation. Owner earnings were about $0.0097 per share in fiscal 2025 and $0.0092 in fiscal 2026 (about $2.9 million and $2.7 million). Fiscal 2024 (about $0.0031) was the acquisition year and is excluded. That is a decline of about 6% in the latest year, and we assume no rebound: marketing spending rose from $0.84 million to $2.84 million while revenue grew only $2.6 million, and the first quarter of fiscal 2027 showed revenue of $9.0 million against $8.8 million a year earlier, roughly 3% growth. Investment gains and losses in the company's small securities portfolio are not part of operating cash flow and are excluded. Bear, base and bull are stated per share on a discounted basis at 6%; no cash or debt adjustment is made because the earnings are already after interest, and the company carries little debt. A tax step-down we do build in. Fiscal 2026 cash taxes were only about $0.15 million because prior losses shelter income. The filing shows those loss carryforwards at roughly $3.8 million against pre-tax income of about $3.1 million, so they should be used up within roughly a year or two, and we expect cash taxes to rise toward the 21% federal rate. We lower normal owner earnings to about $2.1 million (about $0.0072 per share) on that basis. Base case ($0.068 per share). Owner earnings stay flat at about $0.0072 per share for ten years, then fade to zero over the following ten. We credit no growth: nothing in the filings secures it, the latest year's earnings fell, and margins are drifting down. We credit a twenty-year life for a licensed, profitable pharmacy operation because it has produced roughly $3 million of owner earnings for two consecutive years, but we do not extend it further. Bear case ($0.015 per share). The company itself warns that its compounding pharmacies depend on an FDA exemption tied to the drug shortage list, and that if the FDA removes key ingredients from that list or alters enforcement, it could be forced to immediately halt production of highly profitable product lines. Combined with the falling gross margin and higher advertising needed to hold volume, we assume owner earnings halve to about $0.0036 per share for five years and then end. Bull case ($0.082 per share). The advertising spend converts into modest growth at the roughly 3% pace seen in the most recent quarter, taxes normalize as above, and the same ten-year run followed by a ten-year fade applies. We do not credit faster growth or new products (Villas Health Care clinic, MagneChef) because none has yet shown earnings. What could make this wrong. The exemption risk above is the largest; the filing does not say how much revenue depends on the affected products, so we cannot size it more precisely. Very small companies also carry thin liquidity and governance risk (two officers hold a Series B preferred with voting control, and the company recently reversed pay arrangements and cancelled shares after a receiver review). Management is buying back shares under a $10 million program, repurchasing 2.7 million shares for $0.47 million in fiscal 2026; we do not count this as value creation. The reported net income figure ($3.6 million) includes a $0.77 million non-cash tax benefit that we exclude. Margin-of-safety price. Given the size of the company, the single-point regulatory exposure and the short record, the margin-of-safety price is set at a discount of roughly 60% to the base case, about $0.025 per share.