The Numbers: Number of stores: 1500 Expected eggs per store per...

The Numbers:

Number of stores: 1500

Expected eggs per store per week: 35-50

Expected EBIT per egg: 20-30c

They have been getting 30c at smaller stores selling them at much higher prices, but Walmart will be selling them for half the price of some other stores and will have a lot of power to whittle down Yowies' margin.

Annual EBIT from initial Walmart contract using midpoints: $828,750 (25c x 42.5 eggs x 52 weeks x 1500 stores)

Net Earnings (assuming 33% tax and no interest costs): $638,137.5

Numbers don't exactly look amazing.

If Walmart go on to double the roll out to 3,000 stores that's still only $1,276,275 pa.

Even if they have 5 chains signed up to an average of 1500 stores, that's still only $3,190,687.5

I think eventually they would hope to well exceed these numbers, but even if they double them (i.e 10 chains averaging 1500 stores each) that's still only just over $6m net profit.

I think maybe this is why they couldn't get Foster to stump up over 50c/share.

Still think this is a great company, with great potential and great ideals but already priced at $70m, this is probably a bit expensive for some tastes. I certainly wouldn't call it a bargain.

Just been checking this company out so thought I would share my back of napkin analysis.