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Smith & Wesson Holding Corporation Message Board

  • perple_haze3890 perple_haze3890 Mar 26, 2013 1:37 PM Flag

    Post acquisition price per share

    Mr Market says SW is only worth 1.1x sales. So if total sales go up 30%, stock price will go up 33% for starters. The market will see a more stable company and another group of funds will take new or increase positions. Don't wait for the analysts to tell you what they think, they are usually self serving, so when their boss wants to accumulate, they scream SELL SELL. And when they want to distribute, it become a wonderful value.

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    • Wait, what? If it is organic sales I agree, but if they acquire sales using debt or equity you have to factor in dilution, interest costs, and a risk premium for carrying more debt.

    • you are 100% right. Analysts including Cramer only serve themselves

    • Problem is Smith doesn't report again for almost 70 more days and there's still the Secondary out there.
      I haven't seen any calls from analyst to sell, so it's not yet a buy for the 3 reasons just stated.

      • 2 Replies to datbehardwork
      • Zippy, numbers don't mean a thing in todays World, not with computers trading shares in miliseconds. That would be like me looking at the Wall Street Journal 25 years ago before internet made stock prices instantaneous.
        Can you imagine trying to trade against people today and all you had was news and quotes from the WSJ???
        If you want to look at numbers or fundementals (which really aren't current in themselves) I would use the 50 and 200 day moving averages as many Institutions and most algos have them built into their programs. Right now SWHC has violated both of them. This is a BIG no-no.
        "Warning Will Robinson, Warning!"

      • Oh. Well sometimes you have to think of the numbers yourself, and shouldn't wait around for a self-interested analyst to tell you what to think. There really hasn't been too much commentary from any analyst (other than internet cretins).

        So here are your numbers in millions:

        Existing SW Assets-------281
        Acquired assets-----------175
        Total Assets----------------456

        Exisiting SW Liab---------125
        New Debt (net)-------------175
        Total Liab-------------------300

        Existing Equity----------- 156
        New Equity---------------0000
        total equity----------------156

        Total L&E------------------456

        Note - not booking any goodwill above.

        Ebita existing-----------$126
        Acq EBITDA-------------$50
        New EBITDA------------$176

        Current EBITDA
        Multiple is 4.6x-------- Mcap is then $810 minimum

        $810,000,000 / 64,000,000 shares = $12.65

        Keep in mind the EBITDA multiple is outrageously low and will increase as the company goes to a 'MIDCAP' classification so the value would max at 8x ebitda or $22 per share.

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