Further to my valuation, was thinking that valuation is fairly meaningless without an understanding of what outlook it is based on. In this case, the $1.68 is already based on a reduction in annual sales growth rate for 2007 to 3.5% and a reduction in margins of 1.1%. By comparison, over the 5 years of historic data, sales have grown by 9%pa and margins increased over the period by 4.7%. NPAT has increased by a compound rate of 15%pa.

My valuation already incorporates a fall in profit for 2007 (and I suspect this is true of other analysts predictions). As analysts are reluctant to recommend companies in which the reported NPAT falls (due to the sentiment reaction), BGR has mostly been given a hold rating.

So far, BGR valuations and share price have risen as the company has turned out to be more resilient to slowdown than expected. Should this trend continue, there is plenty of upside to valuation. A continuation of this years sales growth and margins into 2007 would raise my valuation to $2. Furthermore, a return to the historic average growth rate from 2009 for the rest of the decade would give a value of $2.65...

Which probably all just goes to show how subjective valuation actually is. But the point is that BGR is being valued conservatively to already include a slowdown. If the slowdown fails to materially impact BGR, there could be quite a rapid move upwards in analyst valuations.