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Krispy Kreme Doughnuts, Inc. Message Board

  • jp_92835 jp_92835 May 9, 2000 11:40 AM Flag

    5 year time horizon 745

    Given the present market cap at 500 million, KREM
    should reach a market cap of at least 6 billion within a
    realistic 5 year time horizon based on present rate of
    expansion. Factoring into the equation a P/E ratio adjusted
    down to 20 and the industry average of 6% net. The
    stock price would reach the mid 700s'or split adjusted
    to an cost basis of $3.40 at todays current
    price.
    Stay long and eat those shorts.

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    • If you do the math on your projections, using
      your estimates of 6 billion market cap in five years,
      6% net income (which would be a generous 100%
      increase over the present), and a P/E of 20, you get a
      company with 5 billion in sales and 300 million in profit
      in five years. That is a CAGR of 87% in sales and
      150% in profit. KREM is projecting a 15% incrase in
      EPS this year, and analysts are giving them a
      generous 25% for the following five years. Oh, and by the
      way, Tricon has a market cap of around 6 billion, and
      they have 30,000 units, knucklehead...

    • Your post was so infantile and preposterous, but
      I'll take the bait and refute you.

      You suggest
      KREM should reach a market cap of 6 billion in five
      years, just based on the present rate of expansion.
      Hmmm, that would happen to be Starbuck's current market
      cap, a company with 30 times the sales and 20 times
      the income. So given your logic, five years ago KREM
      would have had sales of 7 million. No, closer to $120
      million, buddy.

      But let's assume you are right and
      the actual present rate of expansion does pan out,
      and sales and profits double to $440 million and $12
      million. Hell, let's say profits QUADRUPLE, just to make
      it interesting. At SBUX current P/E (a very generous
      one, given the fact it is highest in the industry
      after KREM), that gives you a market cap of $750
      million, or $64 a share. In 2005, not 2000. Of course, if
      profits only keep pace with sales, you get a price of $32
      five years down the road.

      Enjoy it while you
      can...

      • 1 Reply to dollars2donuts
      • KREM is a newly franchise operation, mostly
        independently owned with a small float. The value of the
        limited available shares increase exponentially with
        every dollar increase in market cap. The predicted
        share price at the end of a five year growth phase will
        reward the early birds. Isn't the whole idea of
        investing based on jumping in at the start of
        a
        venture. If you shorted McDonalds or Home Depot after
        these issues went public you got wacked. I am a buyer,
        staying long and view short pressure as an opportunity to
        buy and squeeze.

 
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