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Staples, Inc. Message Board

  • joshnsams28 joshnsams28 Aug 14, 2010 3:39 PM Flag

    Vender Zagg

    Zagg will be selling their products at Staples.

    Assuming management is right and profit margin does improve from Q2 and the 30% rev growth guidance holds true then ZAGG’s should be at least $4.00. Here is why:

    Discount the stream of income starting with .13 and increase that by just 25% for the next year and then 12% growth every year after that. The 12% comes from looking at other comparable retailers and their 5 year estimated growth rate. 12% is on the low end, especially because Zagg is only in a sliver of the market and has a potential much greater than other retailers with estimated growth rates of 12% or higher. The NPV of that stream of income is $4.01 if you use a discount rate of 9.8% (which is derived from the risk-free rate plus the beta of .76 times the difference between an assumed 12% market premium and the risk free rate – the 10 year treasury).

 
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