Quick look into5 Aug 2023 08:09
From a cash perspective the company is looking incredible, but I'm just curious on whether the company can continue the momentum from Covid, and gain a larger market share. I plugged some numbers into my valuation template and forecasts a 30% growth for the next 5 years, with the new warehouse and facilities being built. We're looking at a potential value of £2 per share, I believe this needs to take consideration of the next earnings, and will be the catalyst.
The markets currently pricing in a 11.5% growth rate for the next 5 years, putting the share price on track, which looks reasonable.
If you believe that purchasing bathrooms online will grow more than 11.5% over the next 5 years then this is a strong buy, but considering companies like eve sleep and purple bricks who tried the transition to pure online selling and failed then this is a speculative.
I believe the next earnings report will answer many questions, with a key focus on what they are doing with their cash and will they exceed growth targets. However, there growth strategy seems like its working, I'm sitting on a weak buy
Stock Ticker VICTORIAN PLUMBING GROUP PLC (XLON:VIC)
Current share price £0.83
52 week high £0.95
52 week low £0.33
Growth Rate (yrs 1 -5) 30%
Growth rate (yrs 6 - 10) 15%
Discount Rate 10%
Terminal Value (multiple of FCF) 12
Year 0 Free Cash Flow £14.00
Stock based compensation £3.90
Net Cash/(Net Debt) £35.50
Shares outstanding 325.2
Present Value of Future Cash Flows (Millions) $568
Intrinsic Value (Millions) $603
Intrinsic Value (per share) $2
Current Margin of Safety % 55%
Margin of safety
10% $1.67
20% $1.48
30% $1.30
40% $1.11
50% $0.93