Thanks for breaking down your thinking. What is your fair value in a years time? My growth assumptions lead to 26cps next year, which leads me to something significantly higher than $4 one year on. Obviously we invest based on an expected SP appreciation over time, so fair value today with a certain amount of growth can still be a good investment when considered what fair value is in a years time.
If they achieve 50% growth next year then it confirms they can continue to grow at this solid rate, then my market cap value for them will be 334 million in 12 months time or $5.40 per share.
*However if they grow at less then 50% then value of share could be a lot less.
I listened to the conference call and they said they will likely grow more than the Pharmacy growth rate for natural skincare which is a bit more then 20%.
If you did a 40% growth model for Trilogy, Goodness and Ecoya and 10% for CS, then you have a value of 267 million or $4.32 per share in 12 months time and thats quite possible that growth slows a little from this year. I think you should always prepare for them to under-perform and buy with a margin of safety.
Last edited by silverblizzard888; 30-05-2016 at 05:13 PM.
Reason: spelling
Considering we had EBITDA growth of 208% from 15-16, surely a 50% growth figure for 16-17 seems....very possible?
EDIT: Also worth noting (not that I know what I'm talking about at all) that market cap is an odd way to calculate growth, revenue, EBITDA, EPS all seems like better ways to calculate where the market cap will be next year, from this we can guess a share price. But to start at the market cap seems backwards? Someone please correct me
If they achieve 50% growth next year then it confirms they can continue to grow at this solid rate, then my market cap value for them will be 334 million in 12 months time or $5.40 per share.
*However if they grow at less then 50% then value of share could be a lot less.
Thanks for clarifying. I've only assumed a max revenue growth rate of 25% (different over the different segments) and come out with around $6 per share. And that's my relatively conservative model
Considering we had EBITDA growth of 208% from 15-16, surely a 50% growth figure for 16-17 seems....very possible?
You want to consider the business and make an adjustment that they acquired CS & Co so it made ebitda jump, without CS & Co ebitda increased 118%. That puts it into a better perspective. Sales usually grow a lot less than ebitda, especially considering TIL can be considered a fairly high margin business.
Originally Posted by muss1
Thanks for clarifying. I've only assumed a max revenue growth rate of 25% (different over the different segments) and come out with around $6 per share. And that's my relatively conservative model
As I did say we all have different ways of valuing so interesting to hear you got to $6. I prefer my way cause its simple and provides a conservative way to look at it. I'm not a fan of using multiples of anything because the basis for that use is on the sector and other firms around it. This can change very quickly and sometimes does not provide the most accurate way of measure, assuming you used a certain multiple based on other firms.
Last edited by silverblizzard888; 30-05-2016 at 04:25 PM.
You want to consider the business and make an adjustment that they acquired CS & Co so it made ebitda jump, without CS & Co ebitda increased 118%. That puts it into a better perspective. Sales usually grow a lot less than ebitda, especially considering TIL can be considered a fairly high margin business.
As I did say we all have different ways of valuing so interesting to hear you got to $6. I prefer my way cause its simple and provides a conservative way to look at it. I'm not a fan of using multiples of anything because the basis for that use is on the sector and other firms around it. This can change very quickly and sometimes does not provide the most accurate way of measure, assuming you used a certain multiple based on other firms.
Yep. I prefer to keep things as simple as possible as the market doesn't care how flash your model is, so I certainly agree with you there. I have done my assessment as a holder deciding whether to sell (I have decided certainly not). Therefore I have tried to be conservative but realistic. If I were deciding whether to buy I would have been more conservative and applied a lower multiple to a slightly lower EPS. Maybe something closer to $5-5.50
Considering we had EBITDA growth of 208% from 15-16, surely a 50% growth figure for 16-17 seems....very possible?
EDIT: Also worth noting (not that I know what I'm talking about at all) that market cap is an odd way to calculate growth, revenue, EBITDA, EPS all seems like better ways to calculate where the market cap will be next year, from this we can guess a share price. But to start at the market cap seems backwards? Someone please correct me
Market cap is Enterprise Value less debt
Best way to calculate Enterprise Value is by a DCF analysis - to give an equity value (ie market cap)
Far more robust valuation method than using multilpes - so jinx, not an odd way of coming to an valuation
“ At the top of every bubble, everyone is convinced it's not yet a bubble.”
The future is all about how much revenues from Trilogy/Ecoya (particularly Trilogy) so done a few scenarios as to what future revenues might look like and fed them into the DCF Model. CS impacts are feed in separately (because they have lower growth expectations and have lower margins)
Base case is valuation is now $5.09
A high growth for longer scenario gives $6.34 while a lower growth scenario gives $3.83
So in my view the market is currently valuing TIL if it follows the bottom line on the chart (30% revenue growth not counting CS in F17), Pretty conservative
As such I am inclined to still believe the hype and expect revenues to at least follow the middle line - and see a higher share price than now in the future
But really wow if the hype is really supper hype - $6 sounds good
Load of the old proverbial eh so have a good laugh - but I have faith in my analytical and financial modelling skills. But that doesn't guarantee the market sees things this way as the market acts in funny ways sometimes.
I betch Pie Funds analysts numbers aren't that different from mine
“ At the top of every bubble, everyone is convinced it's not yet a bubble.”
Originally Posted by muss1
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