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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
    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

      • 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
        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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