Here are a few figures for you of a comparable beverage company. This is why HANS will never sell at its current high multiple.
Cadbury's beverage unit had revenue of approx $550m and a 10% EBITDA. This unit sold for $770m.
If you double the $770 to account for HANS higher Sales and growth (which are about double) and their EBITDA margins of 17% verse 10%, then HANS should be trading at 2.5B. This equals a stock price of $27/share. And as you can imagine, the worse the economy gets, the smaller the buy out price would be.
Cadbury isn't a small no name brand which makes this buy out very comparable. A smart fund will figure this out and sell before everyone else does and runs for the exit.
I wonder if all these top executives selling millions of dollars worth of HANS think its over valued also. Who would know better than an insider executive... smart money follows them out the door.
"Hansen Natural Execs Pour On the Sales By Avi Salzman
IT'S HARD NOT TO USE THE word extreme when talking about energy drink maker Hansen Natural (ticker: HANS). Teenagers get an extreme rush when they drink a Monster Hitman energy shooter. Extreme-sports stars market the product while hitting big air on their wakeboards. Now, a handful of top executives at the company are selling millions of dollars worth of shares -- a bit extreme, perhaps.
Four directors and executives have sold about $13 million in stock since March 3, including $7 million.. "
Mark, thank you for sharing your research with us. HANS is the best of the best, and it will stretch any comp you get, especially bad comps. I'm glad you're working so hard. At least the money you are losing on your position is getting you some kind of education.
People are cutting back but not on Energy Drinks. People are no longer bragging about trips to Europe, it is too expensive for most.
Instead they are staying hip, and cool by drink a blue Monster. International expansion should eventually kick in, and remember, KO gets almost 80% of its revenues from overseas (I hope that fact is right).
Recent strong products are going to keep it from going down. The Hitman line has fat profits and vidration seems to be, at least by initial sales, going to be a big roll out, albeit smaller profit margins.
I do not think Hans will skyrocket anytime soon although it should slowly go up from here to 45-50 by the end of the year. Word of advice, cover while you have a small loss.
The growth will come from the international distribution that has years of expansion in my opinion.
Is the stock super cheap? No, even I agree with that but $25 or teens? Come on, the mere fact that HANS is now at levels last seen in May 2008 when the Dow was 13k is quite amazing. SImilar performance has been exhibited by BWLD, another company with no debt, big growth potential and great earnings growth.
I would benefit from a close at around 35 and hence do not wish for it to go much higher than 36-36.3 by next Friday.
Sam, you are thinking like an investor with the grow idea. But with all the jobs being lost, wages being cut, homes being foreclosed, etc, (all of which are going up regardless of the bear market bounce), people will cut back on expenses outside of basic needs like sherlter and food.. HANS sales will be impacted regardless of how good it is.. its basic economics.
PS: I drink a Monster blue every now and then myself.. its not bad stuff, just a very tough situation.