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Skullcandy, Inc. Message Board

  • redheadinvestor@ymail.com redheadinvestor Mar 9, 2013 11:57 AM Flag

    Market cap of SKUL: estimate

    Reading the latest balance sheet, I get a NAV figure of about $115 M. Subtracting projected 1Q losses of $10 M from that figure yields $105 M in 2Q. The line of credit might also have to be drawn, resulting in debt expense. I have not factored in whether inventory is overvalued.

    Why is NAV one fair assessment of value? Because the company is money-losing and has offered no forward guidance of when that will change. With 30% of sales lost to HMV BK, SKUL faces severe challenges. SG&A and inventory were rising before the HMV hit.

    SKUL is not BK and will eventually return to profit, but the redirection could be expensive and time-consuming. In the meantime, it is definitely naive to believe that a $140 M market cap ($5.20 share price) is the hard floor for SKUL valuation, or that these problems get solved fast and 2Q is the turn.

 
SKUL
3.66+0.11(+3.10%)May 24 4:00 PMEDT