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Deckers Outdoor Corp. Message Board

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  • cwebjohn cwebjohn Nov 17, 2012 9:56 AM Flag

    Hearing Jefferies saying Deckers is takeover target

    Some simple arithmetic on valuation:

    Timberland sold for 9.3X EBITDA, but the company was only making 700 million in sales in 2011. However, EBITDA was running roughly $245 million according to my research.

    If Deckers were to be sold for the same 9.3X EBITDA, which was $313 million, on sales of 2011' we would be at a 2.910 billion valuation, which if you use the latest Outstanding Share (35.26 million) count we would be fetching a 2,910,000,000 / 35,260,000 or $82.53 per share price valuation.

    Now, I have looked back to find out what the mood was for Timberland investors and the latest quarterly report they had missed badly. I don't believe our management team has reached that point. I believe their strategy is still moving forward and will not be stopped unless some Private Equity really offered a price they could not let go.

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    • Timberland was running sales of 1.43 billion, which makes more sense to me.

    • If we take this year's total EBITDA, which I estimate to be roughly $224 million after Q4, the valuation drops by $20 per share, but much higher than where we are at currently.

      $224 X 9.3 = $2083 or $2,083,000,000 / 35,260,000 = $59.07 per share.

      Of course, this EBITDA multiple was used in 2011. With all the cheap money floating out in the market these days I am pretty sure we could fetch a multiple much higher.

      However, if we take the mean of the two EBITDA values from an excellent year and a bad year (yet still profitable) we would come out with roughly an EBITDA of $268 million, or $268 X 9.3 = $2492 or $2,492,000,000 / 35,260,000 = $70.67 per share valuation.

      I believe the company will be able to get their margins back up to their normal 50% range once they roll out more products that rely less on the sheepskin. Would I buy this company if I had billions? Yes!

 
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