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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

• 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

Enjoy it while you
can...

• 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