Fun with numbers...
Thanks to Balrog on the RB thread....
ragingbull.com
dsperty, it's easy to estimate a ball park figure for earnings on what we presently know.
Each Volpak can produce $5 million in revenue per year. I have heard net margins of 10% all
the way up to over 20% for spring water. Let's stick with just 10% juice and remain
conservative with the lowest margin I have heard of, 10%.
If they have 7 machines up and running by March 1st it will be 8 months with the 7 machines
which would equal $23.1 million in revenues from March 1st to December 31st.
7 * $5,000,000 * 66%(2/3 year) = $23,100,000
2 machines have been running since last November so let's just say from January 1st. That's
another $3.3 million from January 1st to April 30th.
2 * $5,000,000 * 33%(1/3 year) = $3,300,000
They are supposed to have 10 machines by mid year.
So that would be another 3 machines running from July 1st to December 31st for another
$7.5 million.
3 * $5,000,000 * 50%(1/2 year) = $7,500,000
This comes out to a total of $33,900,000 in revenues for 1999. This would yield earnings of
$3,390,000 with a net margin of 10%.
There are 22 million shares out so that would give us $0.154eps
Of course we can speculate till the cows come home about what valuation to give TCBG and
depending on that valuation we can get some extremely high stock prices.
What P/E do you give a company that goes from $0 revenues to $34 million in one year?
From $0.00eps to $0.154eps. We are talking about huge growth numbers.
If we use a P/E of 50, which I think is very conservative, we would have a stock price of $7.70
The best way to value a company that goes from zero to something would be to look at its longer term growth rate, otherwise you get growth rates of infinity because you are dividing by zero.
According to TCBG they estimate revenues of approximately $89 million for the year 2000.
So this would be a growth rate of 161% from 1999 to 2000. So if we were to give TCBG a P/E equal to its growth rate the stock price would be a staggering $24.79 sometime around the early part of next year.
This is all based just on the current estimated figures. But it's all we have to work with at the time. Crunching these kinds of numbers is what makes owning this company's stock so exciting.
Perhaps some of you see this company from a different view point now.
Caution though, these are just estimates, don't base your investment decisions soley on my crude calculations.
To Judith, thanks for that update with the really good information.
Balrog |
