VEG valuation (taking a shot)Hey everybody, I'm thinking of buying into VEG & I sat down today to come up with a valuation.
First off, I was reading about valuations for companies just coming into full scale operations today. It seems that market capitalizations could range from 1.2X to 2.4X revenue, I guess the higher range would be taking into account that management plans to ramp up production in the near future.
As per Jeff, the company will have a maximum capacity of 400,000-500,000 lbs of vegetables per week. Let's assume 450,000 lbs. In the article, "Building a Green Giant", the article states growers for one type of vegetable (can't remember the name) get $1.50 USD per pound on the low range of the scale.
450,000 LBS X 52 weeks = 23,400,000 LBS X $1.50 USD = $35,100,000 USD
$35,100,000 USD X 1.35 FX CAD = $47,385,000
Revenue (CAD) @ $47,385,000 X 1.2X = $56,862,000 market capitalization
$56,862,000 / 56,000,000 shares outstanding = $1.02 target price, say $1.00.
Assumptions: operating at 450,000 lbs per week, all greens sell for $1.50 USD per lbs (I know is not the case).
Thoughts? Comments?