Message Font: Serif | Sans-Serif
 
No. of Recommendations: 3
Hi TF,

OK, I'll try my 2 cents...

First, I wouldn't include Deferred Taxes in SFCF here.  They're
temporary due to a Deferred Tax Aset set up in 2002 and it's running
out.

As well, I don't see any reason to deduct investment income.  The cash
isn't going away in the next few years (unless they make an
acquisition, and then, presumably, that should be reflected in operating
income).

I came at it slightly differently.  The company has said that sales
for thhe first six months of FY05 are expected to be flat, with 6-11%
growth in the last six months; I extrapolate this to 5% for the full
year.  I've then assumed 10% and 12.5% growth in FY06 & FY07, and a 10%
Net Profit Margin for all three years.  Also, I've assumed Depreciation
equal to Capital Expenditures, so SFCF = Net Income.

Results are as follows:

(Current Price = 10.15)                   FY03    FY04      FY05     FY06     FY07
Sales                                   79,075  86,980    91,329  100,462  113,020
Growth                                           10.0%      5.0%    10.0%    12.5%
Net Margin                                8.2%    9.8%     10.0%    10.0%    10.0%
Net Income                               6,516   8,547     9,133   10,046   11,302
Depreciation & Amortization              1,251     958     1,000    1,250    1,500
Capital Expenditures                       -60    -478    -1,000   -1,250   -1,500
Structural Free Cash Flow                7,707   9,027     9,133   10,046   11,302
 
Diluted Share Count                     14,044  14,488    14,923   15,370   15,831
Incr. Diluted Shares                               444       435      448      461
(assuming 3% dilution)
 
SFCF per share                            0.55    0.62      0.61     0.65     0.71
Multiple of 12X                                                               8.57
Multiple of 15X                                                              10.71
 
Cash + Marketable Securities            41,615  49,421    58,554   68,600   79,902
Incremental Cash                                           9,133   10,046   11,302
 
Cash + Mrktbl Securities per share                          3.92     4.46     5.05
 
Business Value at 12X                                                        13.61  =  10.27%  CAGR
Business Value at 15X                                                        15.76  =  15.77%  CAGR

Not attractive enough for me right now given the uncertainties,
but it'll stay on my watch list.

Ed
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.