Value Investing

Price Case Study: How Much Would You Pay For Company X?

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What Price for the whole business would YOU pay? Then tell me the per share price.  The company had operations for 25 years prior to going public. The company’s stock price will under perform the market (SPY) about 1/3 of the time over the next forty years.

BUSINESS XXX? 1974 1973 1972 1971 1970
Cash $2,238,263 $2,168,224
Working capital 27,132,580 16,796,897
LT Debt ** 10,578,269 5,065,567
Shareholders’ Equity 30,734,128 $24,753,623
Outstanding Shares 6,542,250 6,512,950
Net Sales $167,560,892 $124,889,141 78,014,164 44,286,012 30,862,659
Income Bef. Taxes 11,883,754 8,917,188 5,569,027 3,170,599 2,198,764
Pro-forma Net Income $6,158,520 4,591,469 2,907,354 1,651,599 1,187,764
EPS $0.93 $0.70 $0.47 $0.30 $0.23
Units in operation 78 64 51 38 32
ROE 38.67% 36.02%
** Co. has a $12 mil. Credit line renewed yearly of which it has borrowed $4 mil.
Assume Co. needs all cash for operations
Assume strong growth for 40 years.You need a required rate of return of 15%

XXX Company Worksheet (Excel Spreadsheet)

Can you guess the actual name of the company?

To give you some historical perspective of 1974 see:A Study of Market History through Graham Babson Buffett and Others

Winner gets a date with my Ex: http://youtu.be/E55ni_xc4ww (PLEASE do NOT click on the link unless you win the prize)

Via: csinvesting