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.
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!
I did take a look at it. I own Starbucks. It should turn out well for them in the future though the growth from coffee alone remains tremendous with new markets always opening up internationally. Hang in there Jaques, we're not stpid. Did you take a look at ANF's jump the other day after earnings(30%). How can share prices be so suppressed? Because they can, thats it. No big thinking behind it.
UGG brand is dead? Are people BLIND? It's the must have style and brand every winter, this winter inclided. In fact, its all I see anybody wearing. This is the staying power.
I get the revenues are flat and earnings are down, but we got hit with tremendous sheepskin costs last year and that just means we have to ride out this year to get to the better pricing next year. Earnings should go up 15-20% on the savings in sheepskin alone. Plus better pricing on the products should hopefully lift revenues. This is a bargain.
Papa johns trading at 1B, they make just 60M in earnings. Barnes and Nobles losing 70M annually, they are trading at 850M. We are earning 155M and we are trading at 1B. A little bit ridiculous.