To: Anaxagoras who wrote (5922 ) 1/16/1999 12:07:00 PM From: Life Coach Read Replies (1) | Respond to
Anaxagoras, thanks for your response. You are very knowledgeable about this subject and you are correct that margin does play an important role obviously. No. That growth spells tremendous revenues; the only way they'll flow to the bottom line is if we get nice margins. Let's run with this, though: pretend in make-believe-land that EGGS manages a 5yr CAGR (i.e. compound annual growth rate) of 100%, and start off with a base of a TTM revenue figure of about $240M. The end of the 5th year TTM revs would stand at $7,680M. Remember that at the end of the two recent years that EGGS was profitable, '95 and '93, EGGS traded at a PSR of .17 and .18, respectively, remarkably close. Another way to think about this is that at the end of FY95 EGGS traded at 17% of its TTM revenue, and at the end of FY93 it traded at 18% of TTM rev. Applying such a figure to EGGS after the kind of spectacular sustained growth we hope for would give EGGS a market cap of $1,382M, or just a little more than 2x what it is today. And that would be the price around the year 2005! business2.com .
