Valuation of the Week by Tim Insko @tinsko
This is the first in a series, hopefully, by Tim. I met Tim via Twitter and like him so that clearly means he knows what he's doing. ;) Take precautions, but hopefully we can use this platform to share information to the benefit of the "value investor", who then can make an educated decision on a particular security. Do value investors still exist? I hope you enjoy. Personal Disclosure: I am long FRSH and plan to be for quite some time and hope to buy more at 10! -Carmine
Tim's spreadsheet can be viewed here
Papa Murphy's is a U.S. "take and bake" pizza chain with over 1400 locations throughout the country. The IPO was set to price between $11-$13 per share. Based on my assumptions this was a fair price.
A few caveats: 1) The proceeds are being used primarily to pay down debt. I'd rather see an IPO being used to fund growth. 2) The status quo value demonstrates the company is currently destroying value by returning less than the cost of capital. That said, if you price the company relative to its competitors (regression based on margins, same store sales, long term growth and historical sales growth) it deserves a premium.
This is a classic intrinsic value vs. relative pricing case. My final estimate is a mix of the long term improvement case, status quo (value destruction) case, relative value case, and the IPO price itself. This estimate is in no way, shape, or form a recommendation, but is simply a discussion piece.
Feel free to comment on the spreadsheet itself or on here. Have a good week!
Papa Murphy's is a U.S. "take and bake" pizza chain with over 1400 locations throughout the country. The IPO was set to price between $11-$13 per share. Based on my assumptions this was a fair price.
A few caveats: 1) The proceeds are being used primarily to pay down debt. I'd rather see an IPO being used to fund growth. 2) The status quo value demonstrates the company is currently destroying value by returning less than the cost of capital. That said, if you price the company relative to its competitors (regression based on margins, same store sales, long term growth and historical sales growth) it deserves a premium.
This is a classic intrinsic value vs. relative pricing case. My final estimate is a mix of the long term improvement case, status quo (value destruction) case, relative value case, and the IPO price itself. This estimate is in no way, shape, or form a recommendation, but is simply a discussion piece.
Feel free to comment on the spreadsheet itself or on here. Have a good week!