The CEO said the target is to go to 100 stores from a present 60. With 60 stores at a NP of just circa 23m, assume NP grows 67% to 38m based on 100 stores, plus organic growth from population increase & improved branding & visibility, as well as improved margins due to the roll out of the white label products. I think its reasonable BBN can double its profit within the next 5 years to roughly 50m. Discount 50m at the risk free rate of inflation & the present value divided by the current market cap gives a ratio of 15.87. Although thats the risk free rate. There is nothing risk free about retail. If you use the pre covid SP of around $3.6 and a 10% discount rate the present earnings ratio is around 16.6
If you think the execution to 100 stores will be fine then I can see why you would own the stock at this price. Perhaps you might even think 50m is a conservative estimation 5 years out. In which case BBN looks cheap.
Although 5 years is a long time and if you want to apply a fair discount rate to a fair earnings assumption it look like the SP may have overshot the runway. This is one of the stocks that is blitzing the market as a whole which itself is going gangbusters.
I cant help but fell the highlighted is where the SP should be. I dont agree with the explosion above the ASX 200 following the covid recovery.
Price 5.29 (current)
risk free rate 1.5% 1 1 0 2 2 0 3 3 0 4 4 0 5 5 $50.00 6 discounted $45.73 7 Forward Ratio 15.87 8 Market Cap 725M
Price 3.69 (pre covid high)
risk free rate 10.0% 1 1 0 2 2 0 3 3 0 4 4 0 5 5 $50.00 6 discounted $28.22 7 Forward Ratio 16.60 8 market cap 469M
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Last
$1.80 |
Change
0.045(2.57%) |
Mkt cap ! $242.1M |
Open | High | Low | Value | Volume |
$1.77 | $1.80 | $1.76 | $143.5K | 80.53K |
Buyers (Bids)
No. | Vol. | Price($) |
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1 | 14205 | $1.78 |
Sellers (Offers)
Price($) | Vol. | No. |
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$1.80 | 884 | 1 |
View Market Depth
No. | Vol. | Price($) |
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1 | 14205 | 1.780 |
2 | 4378 | 1.750 |
1 | 2438 | 1.740 |
1 | 2926 | 1.705 |
1 | 500 | 1.660 |
Price($) | Vol. | No. |
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1.800 | 884 | 1 |
1.805 | 1335 | 3 |
1.810 | 40780 | 3 |
1.815 | 9232 | 3 |
1.820 | 14765 | 4 |
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