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No. of Recommendations: 3

Your thesis in early January, 2008, posted on Seeking-Alaph was this:

"The current EPS is $1.29. Let's start these numbers by assuming Hansen grows earnings 50% this year and finishes the year with a P/E of 40. The market expanded the P/E a little bit but didn't get any more excited than that.

1.29 * 1.5 * 40 = $77.40

With these pretty conservative estimates, the share price would expand 75% this year. That's with very little P/E expansion and a drop-off in earnings growth despite the two distribution deals becoming beneficial to the company.

Let's take it a step down and assume earnings grow only 45% this year and the P/E stays at 35.

1.29 * 1.45 * 35 = $65.47

That's a 50% increase from today's levels. And I'm not kidding when I say it wouldn't be that good of a year if this is what Hansen accomplishes. Seriously, the company is overflowing with cash and there is only more coming, and now they don't have to put nearly as much effort into distribution; instead it's in the hands of one of the beverage powerhouses of the world.

Let's now take it a step up and expect 55% earnings growth with a P/E of 45 slapped on.

1.29 * 1.55 * 45 = $89.98

More than a double from where we are today. And I really don't believe it's that far out to expect this. The bottom line is Hansen is in a great position and so far I'm convinced management is taking full advantage of it."

Today HANS released earnings which say net profit drop to 49.6% and revenue missed analyst expectations by .06c per share.

One of two possibilities exist: 1) The analysts covering HANS are entirely off their mad-hatter rockers, have no idea how to accurately judge this company, and were expecting nothing short of miraculous results, which I'm afraid not even the baby Jesus could have delivered. The lemmings of the market saw a huge miss and the selling that started this afternoon will continue, creating a buying opportunity the like of which we pray for nightly. HANS is now trading below $30, which according to your theses above indicates if we buy now in 7 months we'll have, at worse case scenario a double, at best case scenario a triple, the funds of which could pay for many barrels of whiskey for Slothrop and his Monkey. Therefore, patience, Fools, this is a jewel heist delivered to your door, buy shares now and retire early.

Or possibility 2): There were inaccurate assumptions made in your estimates above or the business has changed fundamentally. The distribution deal isn't working out as spectacularly as planned, increasing costs weren't appropriately accounted for, tightening of wallets has slowed down the market for energy drinks and so forth. HANS is not the company you thought it was due to a mix of internal and external factors and the $30 price tag is not a bargain but at best a fair value, and more likely still a bit overpriced given the change in business fundamentals.

Slothrop's Monkey acknowledges that the truth might lie somewhere between these two scenarios, but thought he would paint the two pole's as a starting point for discussion. Either way, HANS has cost Slothrop much bourbon and he would like some kind of explanation for he takes his bourbon drinking seriously, and feels that drinking Monster Java is not quite the same experience.

Humbly and thirstily yours,

Slothrop and Monkey
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