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Capital Franchising, Inc. Message Board

  • stenois4me stenois4me Feb 6, 2008 10:44 PM Flag

    Block's Pickle Estimates:

    First of all, I want to thank Block for being the first bull to actually make an argument.

    <<<I'd guess the gross income of average store to be from 250,000 to 750,000; the annual income to corporate will be somewhere $12,500 to $37,500 per store. For 100 stores, corporate would receive approximately 2.5 million.>>>

    So far, so good.

    <<<I don't know what the net income after expenses will be so it's difficult estimate the affect on earnings.>>>

    Well, put it this way. For the 9 months so far, your expenses were $2.4M. $1M are attributed to the fourth quarter alone, so you can easily extrapolate to $3M leaving you <$500,000> in losses. And that's assuming costs remain a constant, which they won't. Even in your own 10-q, they say, "We expect that professional fees will increase in future periods..."

    <<<It is, however, obvious that there is a direct variation relationship between gross earning and net earning after expenses.>>>

    Not necessarily. Margins do not necessarily widen.

    <<<Someone made an understating comment yesterday that McDonald's has found the 5% return from stores beneficial. In the future I think SPKL will find this pleasant to live with also.>>>

    Irrelevant.

    <<<If the gross income of the average store were $1500 per day and there were $1000 stores, the gross income, from this alone would be 50 cents per share.>>>

    You mean 1,000 stores? That's a long ways off and you won't see that for years, if ever. And you need to worry about where the funding of future expansion will come from, because even the 100 stores in the above example are showing losses.

    <<<Since there are expenses involved, if net were 50% of this income, that would amount to 25 cents a shares.>>>

    I've never seen a company with expenses at only 50%. That's unrealistically high, but nonetheless, your net earning conclusion is not supported by the above analysis.

    <<<These are unsupported estimates, but I believe that 1000 stores, or more, will be achieved within a few years or less.>>>

    A few years? Even IFF you opened 30 stores a year, it would take you ten years just to get to 300. That's a far cry from $1,000, and this $60M market cap won't be hanging around for ten years.

    <<<These figures indicate earnings of about 25 cents per shares or, at current price levels, a P/E of 5.>>>

    False conclusion from false premises.

    <<<There is also the caveat that company owned stores will produce additional profit over and above the 5% return to the company that I am using for these estimates.>>>

    There is nothing to indicate that management has the ability to operate company owned stores succesfully.

    <<<Currently there are, I believe, 3 stores either operating or planned to operate shortly.>>>

    Plans, talks, stories, Pr's, hype, but nothing real. No earnings here, and the stock is inflated for success. Best to wait for success first, if ever. YOu are already priced for HUGE success, so that means you are overvalued.

    <<<The principals of SPKL are well aware of the potential of this company and because of this, they aren't going anyplace.>>>

    That's speculation only. There are plenty of other reasons to stock around. One, they have salaries. Two, they can be alpha males. Three, they are getting rich selling stock, and that is fact. There are several reasons to stick around, and "belief" in the company is not a forced conclusion from this observation.

    <<<I'm sure that they have concluded, as I have, that this company has a phenomenal future.>>>

    You can't be sure of that.

    <<<Sentiment : Strong Buy>>>

    Sentiment: Strong Sell

 
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