Fortress Global Enterprises Inc - Class A FTPLF

RE:RE:RE:valuation exercise

[Nbsk]

Assuming prior estimates in post id 29301542 are good and smooth sailing going forward (caveat emptor!):

EBITDA $69M/year,
less Interests $22M/year,
less Taxes $0/year given all the prior losses,
less Depreciation&Amortization $22M/year,
results in $25M/year net earnings

Using an 8x multiple on 25M we reach 200M market cap, or $13/share

Please feel free to correct me, I am no expert. I don't focus on net earnings at this stage given the still recent capital investment, the divestitures, the refinancing, and the long and difficult ramp. I feel that cashflow will allow payment of the expensive debt over time, and then that will become nice 10% earns on that 200M of debt.

Should someone larger take this over at $10/share (350M EV) and reimburse the debt, they could earn 47M, or a 13.4% unlevered yield.

Another way to value is replacement cost. Personnally I think the value of the investment made should be close enough. The preso states 344M. After removing 200M debt we get 144M, or $9.60/share

P/E 8x estimate $13/share
EBITDA 5x estimate $9.75/share
Investment cost $9.60/share
Book value $7.25/share
Quoted market value $1.50/share

My opinion is that value is near $10 yet price is $1.50 . As often said, value is what you get and price is what you pay! Hopefully I am roughly right and not precisely wrong! One year from now we should clearly see actual earnings.

While some must fear bankruptcy given the stock price action, my personal fear is a take-private not giving fair value to all shareholders. You really don't need deep pockets to "steal" FGE.