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Black Diamond, Inc. Message Board

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  • bob_afet bob_afet May 17, 2010 6:34 PM Flag

    Deal terms

    I think the market here is very uncertain about the margins. I made a rough DCF for this with 12.5% margins, 8% annual revenue growth, and a 15% required rate of return and I came up with a valuation of $5.89. Now what I do not take into account is LBO activity (ie leveraging up future cashflows for acquisitions to fully utilize NOLs). Now you pick up another 2.5% on margins valuation goes to $7.20 a share. I'm sure its difficult to take at facevalue when anyone talks about the output of their model but I suggest you run it out yourself and see where it comes out - point is market is not that far off given reasonable (although somewhat conservative) assumptions. I think everyone got in this early on thinking WK would leverage up massively to blow through the NOLs as fast as possible, we just are not seeing that here.

    Happy to share my model with ya if you are interested.

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    • You have probably made reasonable assumptions, and concluded the price is about right. The problem is that the spike up on long awaited news was pretty weak. I assume you would conclude everyone else simply made a calculation similar to yours. If there are only a handful of people following the stock, that might be the case. However, the sentiment in a situation like this would normally be a lot stronger, if there is any pent up
      interest at all.

 
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