Hi aikido10,Would love your opinionWell, the poster, whoever they are, is certainly entitled to their opinion. My initial reaction is that there are certain strengths evident in FAST that does not seem to be taken into account in the valuation (it's difficult to know for sure because many details were omitted). This is either by the choice of the analyst or because it is a "quick n dirty" take and the analyst was unaware of them.First, there is this interesting table that keeps being repeated in the 10K's which shows average sales for FAST's stores based on the age of the store:Age of store site as of Year opened Average Average Percent 31-Dec-06 sales 2005 sales 2006 Change 0–1 year old 2006 — 134 — 1–2 years old 2005 162 492 — 2–3 years old 2004 501 647 29.2 3–4 years old 2003 575 684 19 4–5 years old 2002 643 743 15.6 5–6 years old 2001 841 978 16.3 6–7 years old 2000 752 811 7.9 7–8 years old 1999 898 991 10.4 8–9 years old 1998 996 1,146 15.1 9–10 years old 1997 1,032 1,135 10 10–11 years old 1996 1,062 1,108 4.3 11–12 years old 1995 1,085 1,206 11.2 12–16 years old 1991-1994 1,279 1,396 9.1 16+ years old 1967-1990 2,244 2,419 7.8Because this table is displayed repeatedly in every FAST 10K I've looked at, I believe management thinks it is important and I think it's important too. (I'm convinced that there is not a single unnecessary word in the 10K's, management is impressively concise, to the point, and doesn't waste their time or ours with “fluff”).My take on this table is that sales at a store built today will see significant growth over at least 16 years. If this trend continues, just because the building of new stores ceases in 2010 as the analyst theorizes, it does not mean growth will turn flat in 2010. More likely growth in sales will turn flat some 10 or 15 years later, in 2020 or 2025 if new store builds cease in 2010. I don't think the valuation that you posted, aikido, accounts for the sales growth shown in this table.Also, the 3500 store count is simply a current target or goal for the company. These numbers are continually revised by companies. SBUX recently adjusted upwards their ultimate goal for stores. FAST could conceivably increase the number of store locations feasible for NA. Also, I think expansion into Europe and Asia is possible.The latest 10K goes to some length in discussing ongoing initiatives aimed at improving efficiencies: the CSP2 store conversion, the new CSP3 store conversions, the National Accounts Group reorganization, and the new Indianapolis warehouse. I expect all of these initiatives to either increase sales or reduce working capital requirements and in both cases that will result in an increase in Free Cash Flow and the value of the company. Again, I don't think the valuation you posted accounts for these initiatives.What new and future initiatives will FAST implement in the years ahead that will target further increases in sales or even greater efficiencies? I think there will be many and I don't think they were accounted for in the valuation you posted.The details of the DCF calculations weren't given by the poster so it is hard to verify for sure. But, if I understand the method employed it is a simplified method that, in the case of FAST, misses much of the intrinsic value of this company. I prefer my original posted valuation technique a few threads back to the one employed by this poster.With all that said, I'm going to admit that FAST is no screaming bargain in a Ben Graham sense. But, FAST is without question a wonderful company and I think even at the current quotation is fairly priced. As Buffett has said, “It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” Rich
Age of store site as of Year opened Average Average Percent 31-Dec-06 sales 2005 sales 2006 Change 0–1 year old 2006 — 134 — 1–2 years old 2005 162 492 — 2–3 years old 2004 501 647 29.2 3–4 years old 2003 575 684 19 4–5 years old 2002 643 743 15.6 5–6 years old 2001 841 978 16.3 6–7 years old 2000 752 811 7.9 7–8 years old 1999 898 991 10.4 8–9 years old 1998 996 1,146 15.1 9–10 years old 1997 1,032 1,135 10 10–11 years old 1996 1,062 1,108 4.3 11–12 years old 1995 1,085 1,206 11.2 12–16 years old 1991-1994 1,279 1,396 9.1 16+ years old 1967-1990 2,244 2,419 7.8
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