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Pizza Inn Holdings, Inc. Message Board

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  • smaycs4 smaycs4 Nov 7, 2011 1:49 PM Flag

    How to Finance

    Its not going to carry the kind of multiples that post talks about because roughly 25 cents of their earnings is from the old pizza inn, which tended to carry a PE of 8.


    The signing of a well capitalized franchisee who plans to move fast would help, but anyone with that kind of money & experience is going to wait for the concept to prove itself at least a dozen times before they commit to building 20+ stores.

    Its not like the country couldnt support many hundreds (1000+ ?) of quick service stand in line pizza stores.

    Opening 2 doors down from another pizza place takes some balls.

    Finally, it takes 18 months for the honeymoon period to wear off. And thats when you see if the concept can survive & prosper.

    Right now, the newness is providing a lot of the sales.

    Over time, that will wear off.

    It will be interesting to see it play out.

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    • >>Its not going to carry the kind of multiples that post talks about because roughly 25 cents of their earnings is from the old pizza inn, which tended to carry a PE of 8.<<

      As the writer of "that post" I ask you to re-read it:
      http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_P/threadview?m=tm&bn=14963&tid=3106&mid=3106&tof=60&frt=1

      If EPS grows from .25 to .40 that's 38% growth REGARDLESS of smaller growth of the "baseline," and thus well-deserving of a 20x+ multiple as that growth would only be in the very early stages. Look at it this way: if that baseline .25 were growing 1500% (as the Pie Five business's EPS contribution could, going from .01 to .15/share on a late 2012 run-rate basis), you'd see a MASSIVELY higher multiple on the prospective .40/share I'm looking for by late next year. Additionally (and left out of the EPS number in that analysis) is the fact that the market could very well put a multiple on the up-front Pie Five franchise fees; if that were to happen, we could see even a higher stock price.

      • 2 Replies to Logicalthought
      • Pre pie 5 PZZI was a $2.00 stock. So an 8 multiple remains on the stagnant old legacy business.

        Throw your 20 multiple on the INCREASE and add it to the $2 and you've got $2.00+3.00=$5.00.

        Extrapolating hoped for growth in a totally unproven venture is risky as can be.

        Its as if PZZI is the one company in the entire food universe that can & will catch lightening in a bottle while somehow, blowing by any & all competitors despite little to no barriers to entry.

        Its just not reasonable that it happens that way.

        That said, I hope the stock keeps going higher because I will continue to peel off shares and lock in gains.

      • What is your short term target? (I know - a crap shoot)

        2-3 months?

        My guess is that a company looking to push hard into a fairly new concept (fast / casual gourmet Pizza) could easily be looking at a 3+ SALES multiple.

        Again...they have to show some good results that the concept is working - but a 3 times sales multiple for a company that can show exceptional early leadership growth in this particular space may be reasonable?

        To me that would translate into (absolute best case) $120 to $130 Million Market Cap in 2012. But to hit that Market Cap in the next year would think they would have to bolster their Balance Sheet with a $5 to $10 Million Capital Raise at some point.

        $14 to $16 per share.

 
PZZI
5.78-0.04(-0.69%)Apr 23 9:30 AMEDT

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