Continue reading Latest Zynga Valuation Estimate: $5 billion(!)

Latest Zynga Valuation Estimate: $5 billion(!) originally appeared on BloggingStocks on Wed, 07 Apr 2010 11:30:00 EST. Please see our terms for use of feeds.

Continue reading Facebook Worth $35 Billion?

Facebook Worth $35 Billion? originally appeared on BloggingStocks on Fri, 26 Mar 2010 16:40:00 EST. Please see our terms for use of feeds.

Defense firm Oshkosh Corporation (OSK) is wallowing in red ink, after Barron's published a downbeat article on the company over the weekend. After securing a $3 billion, five-year Army contract, the author warns that "Oshkosh may have won the battle but lost the war."

The main thrust of the article appears to be an argument against further price appreciation for OSK, which has "gained 448% over the past 12 months based on a booming military business," according to Barron's. Plus, Tom Harenburg, a longtime investor in the company, adds that profit margins on the Army deal "are meager."

Continue reading Oshkosh Smacked by Bearish Barron's Article

Oshkosh Smacked by Bearish Barron's Article originally appeared on BloggingStocks on Mon, 01 Mar 2010 12:50:00 EST. Please see our terms for use of feeds.

Michael Moe knows how to make headlines: Talk about Twitter and predictably people will bite (I'm proof of that). He led the team at NeXt Up Research that calculated the value of the micro blogging service and arrived at $526 million to $674 million -- half what Twitter is generally believed to be worth.

Really?

The team estimates that Twitter will generate revenues of $114 million to $134 million in 2013. In 2014, Twitter is expected to post revenues of $126 million to $148 million. This is far more conservative than the valuation implied by the company's most recent round of venture capital investment, which puts the company's worth at more than $1 billion.

Continue reading Twitter valuation off by half: NeXt Up Research

Twitter valuation off by half: NeXt Up Research originally appeared on BloggingStocks on Sat, 14 Nov 2009 15:30:00 EST. Please see our terms for use of feeds.

Continue reading Tyson Foods downgraded by JPMorgan

Tyson Foods downgraded by JPMorgan originally appeared on BloggingStocks on Wed, 11 Nov 2009 10:00:00 EST. Please see our terms for use of feeds.

In the most recent edition of Barron's, fund manager Scott Black touted shares of Cal-Maine Foods (NASDAQ: CALM), the country's largest egg producer, as a stock worth buying. The company generates a return on equity of over 30%, and Black said that at just over 5x earnings, the stock is extraordinarily cheap. When the market revalues Cal-Maine at "just eight times [next year's estimated] earnings, you've got a $38.50 stock." Shares of CALM, which closed Friday at $22.90, were up to $24.86 by Wednesday morning.

I'm familiar with Cal-Maine, having been introduced to the company more than a year ago when it was the focus of a presentation at the Boston College Investment Club. Last summer, I spoke with the company's CFO, Tim Dawson, who gave me a much better understanding of the egg business. Though I came away convinced that Cal-Maine is in very capable hands, I believed then -- as I still do now -- that the stock is not a buy. Here's why.

Continue reading Cal-Maine gets a Barron's boost, but is it a value trap?

Cal-Maine gets a Barron's boost, but is it a value trap? originally appeared on BloggingStocks on Tue, 16 Jun 2009 13:00:00 EST. Please see our terms for use of feeds.

It's been "shock and awe" for the financial system over the past few months. Even seemingly invincible companies like GE (NYSE: GE) and Goldman Sachs (NYSE: GS) have not been immune. As a result, there has been a tremendous deflation of equity values across the globe.

Unfortunately, the game has also changed for your business. It's much more difficult to get debt or equity financing, and it may even be impossible, at least for now. Customers are having difficulties paying invoices. And, as for finding new customers, this is particularly tough.

So, in light of everything, what is the value of your business? Well, keep in mind that, for the most part, the value of a business is dependent on its cash flow. So long as this remains strong and long-lasting, you are likely to weather the storm. If anything, you could be in a nice position to capitalize on the situation, such as by buying companies, hiring employees and in making new investments.

But this is the rare exception. In fact, even some of the growth darlings are having issues. For example, the data service, VCExperts.com, has recently launched a new offering - called the Valuation Ticker - that provides valuations of venture-backed companies. Essentially, the system compares private companies to public indexes, such as the NASDAQ and S&P 500. Here's a look at a sample, with valuations over the last ten months:

• Facebook: $12.4B (12/31/2007), $6.9B (10/31/08) -- 44%
• Slide: $545.2M (12/31/07), $376.6M (10/31/08) -- 31%
• Yardbarker: $18.1M (03/03/2008), $14.2M (10/31/08) -- 22%
• Going: $21.9M (5/07/08), $15.2M (10/31/08) -- 31%

Continue reading Entrepreneur's Journal: What is your business worth after the financial panic?

Entrepreneur's Journal: What is your business worth after the financial panic? originally appeared on BloggingStocks on Sun, 16 Nov 2008 18:30:00 EST. Please see our terms for use of feeds.

Like just about all other private equity firms, Blackstone Group LP (NYSE: BX) reported a horrible Q3, with losses of $502.5 million, or $0.44 per share. However, the firm was fairly optimistic on the overall value of its sprawling portfolio of companies. That is, the writedown was only about 7%.

As a result, some investors were naturally skeptical - and the stock price of Blackstone continued to slide.

Well, this week, the CEO of Blackstone, Stephen Schwarzman, opined on the matter at a Merrill Lynch investor conference. Basically, he was mostly rosy and thinks there are good valuations in the marketplace. But, paradoxically, he said the Blackstone equity portfolio is in good shape.

And, in general, he has a point. If you take a look at the history of private equity, the best investment periods are in tough times (such as the early 1990s and 2001).

Continue reading Blackstone's equity portfolio is hunky-dory, or so Schwarzman claims

Blackstone's equity portfolio is hunky-dory, or so Schwarzman claims originally appeared on BloggingStocks on Wed, 12 Nov 2008 10:30:00 EST. Please see our terms for use of feeds.

Shares of VMware Inc. (NYSE: VMW) are headed lower today following a downgrade from Merrill Lynch. The brokerage firm cut its rating on the equity from Buy to Neutral due to valuation concerns; VMW has added more than 60% since its October 21 earnings report. Merrill maintains a $31 price target on VMware, which represents a premium of just 1.4% to the stock's closing price on Tuesday.

It's shaping up to be a rough week for VMW. Yesterday, the tech stock sat out a broad-based rally in the equities market, and slumped to a daily loss of nearly 4% as word hit the Street that Intel (NASDAQ: INTC) chopped its VMware stake in half. Specifically, Intel unloaded about 4.75 million of the 9.5 million VMW shares it purchased in July 2007. According to a regulatory filing, half a million shares each were sold to Cisco Systems (NASDAQ: CSCO) and EMC Corp. (NYSE: EMC) -- the latter of which already owns a majority stake in VMW.

With VMW shedding nearly 6% out of the gate this morning, it seems likely that the shares will add on to their year-to-date slump of more than 64%. The stock continues to find resistance from its 10-week and 20-week moving averages, and a reversal of optimism among option traders could accelerate the equity's decline. During the past 10 days, investors on the International Securities Exchange have bought to open nearly two times more calls than puts on VMW.

Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.

VMware chopped to Neutral after Intel slashes its stake originally appeared on BloggingStocks on Wed, 05 Nov 2008 11:15:00 EST. Please see our terms for use of feeds.

Merrill Lynch analyst Guy Moszkowski had some harsh words this morning for Goldman Sachs Group (NYSE: GS). Rather than a fourth-quarter profit of $2.98 per share, the analyst now expects Goldman to lose 49 cents per share during the quarter. If his prediction comes to pass, it will mark the bank holding company's first-ever quarterly loss as a public company.

While Moszkowski razored his price target on GS from $159 to $100, he maintained his Neutral opinion on the stock. The new target represents a premium of 8.1% to the stock's closing price last Friday. The analyst cites the "stressed" equities market as the primary driver behind his dramatically reduced outlook on Goldman.

In a note to clients, Moszkowski explained that Morgan Stanley's (NYSE: MS) business mix should allow it to weather the choppy market conditions better than Goldman. He trimmed his fourth-quarter earnings forecast on Morgan as well -- dropping his estimate from 72 to 36 cents per share -- but considers the stock a Buy.

The analyst stated, "We still think GS remains in many ways at the forefront of the capital markets industry, but if it can't consistently produce a premium return on equity, it's not going to be able to continue to have the premium valuation multiple that it has enjoyed." As of last Friday's close, Goldman's forward price-to-earnings ratio of 7.63 dwarfed Morgan's ratio of 4.03.

In today's session, MS is up about 5%, compared to Goldman's gain of about 1.2%.

Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.

Skeptical analyst predicts fourth-quarter loss for Goldman Sachs originally appeared on BloggingStocks on Mon, 03 Nov 2008 11:18:00 EST. Please see our terms for use of feeds.

In a note to clients, Bernstein boosted its rating on AAPL from Market Perform to Outperform, and said that its "longer-term growth story remains intact." Analyst A.M. Sacconaghi added, "Investors appear to be valuing Apple on an earnings multiple, rather than on cash flow, which fundamentally undervalues the company given the huge deferred revenue growth associated with the iPhone."

Specifically, the brokerage firm estimates that the iPhone itself could add between $2.25 and $3.40 per share to cash flow above earnings in fiscal 2009.

However, following the stock's recent free-fall down the charts, Bernstein was forced to trim its price target on AAPL from $175 to $135. Credit Suisse followed suit, slashing its price target on the equity from $200 to $135. Despite today's gain of about 7% amid a massive rally in U.S. stocks, Apple shares could be vulnerable to more price-target cuts during the near term. Thomson Financial pegs the average 12-month price target at $176.33, a lofty premium of 82% to Friday's close at $96.80.

Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.

Apple attracts an upgrade on valuation, but can't escape price-target cuts originally appeared on BloggingStocks on Mon, 13 Oct 2008 12:44:00 EST. Please see our terms for use of feeds.

Let's say you want to sell or buy a business. Or, suppose you want to gift a piece of your business to your family. Maybe you want to raise capital?

Well, you'll need to determine the value of your business.

So, to get some perspective on the topic, I spoke to Scott Gabehart. He has valued over 700 businesses since 1991 and has written several books on the topic, such as The Business Valuation Book (with CD-ROM).

According to him, there are several approaches to getting a valuation:

Do-It-Yourself: Yes, the valuation process can be extremely complex. But Gabehart has an easy system that will provide a rough estimate.

First, you will need to calculate your company's adjusted cash flow (ACF). This is:

Net income
+ Your salary
+ Your perks (personal travel, discretionary expenses)
+ Depreciation
+ Interest expense

After all, it's common for owners to use their business to pay for personal expenses. Thus, it's important to factor our certain items (for example, depreciation is a non-cash expense).

Continue reading Entrepreneur's Journal: So, what is your business worth?

Entrepreneur's Journal: So, what is your business worth? originally appeared on BloggingStocks on Sun, 13 Jul 2008 14:00:00 EST. Please see our terms for use of feeds.

Continue reading Are stocks cheap right now?

Are stocks cheap right now? originally appeared on BloggingStocks on Fri, 18 Jan 2008 14:58:00 EST. Please see our terms for use of feeds.

I had the chance to talk with four different British portfolio managers this past Friday, review the 2007 year and discuss the outlook for 2008. Funny, the four conversations ended up circling back to Apple (NASDAQ: AAPL). Two of the managers mentioned my article for BloggingStocks from November 24. I wrote that the this could be the last time to buy the shares under $175. The stock closed at a new 52-week closing high on Friday at $194.30, almost $20 higher than the November 24 price. Yet, with all this action and performance, recently and all year, the stock is still a buy.

My friends the Brits are very bullish on Apple, and are aware of the price targets out there by the various analysts, including mine at $225. These four managers, by the way, manage $16 billion in the U.S. markets collectively. One has done the "internal modeling," and has a $290-$300 price target by year end 2008, and another has a $375 price target by mid-year 2009. All managers have sworn to me that they drank nothing harder than English tea during our conversations!!

Continue reading The view of Apple from London

The view of Apple from London originally appeared on BloggingStocks on Sun, 09 Dec 2007 11:12:00 EST. Please see our terms for use of feeds.

Friday's news that the Israeli generic drug maker Teva Pharmaceutical Industries Ltd. (NASDAQ: TEVA), has received tentative approval from U.S. health regulators to market its generic version of GlaxoSmithKline Plc's (NYSE: GSK) Requip (Ropinirole HCl) tablets is just more proof that for investors, generics are the way to go. The tablets treat idiopathic Parkinson's disease and primary restless leg syndrome. The brand product had annual sales of approximately $455 million in the United States.

The bigger fundamental question has to do with the future of "big pharma"? Certainly companies like Merck and Co. (NYSE: MRK) and GlaxoSmithKline aren't going away anytime soon. The question is over the long run, with drug's continuously coming off patent, where is the growth going to come from? Generic makers like Teva (the world's largest generic firm) keep waiting for drugs to come off-patent, get approval to market a generic version, and immediately take significant market share away from the big pharma company. (Check out Zack Miller's analysis of this and other generic trends.) According to a report published by PriceWaterhouseCooper, by 2020 the pharmaceutical market is anticipated to more than double to US$1.3 trillion, but with weak pipelines, and soaring R&D costs, as well as higher legal costs, the big-pharma industry is at a crossroads.

Until we hear of a real long-term growth plan for big pharma, it seems like the best way to play the surging growth in he pharmaceutical market is to buy the generics.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. Disclosure: Writer owns stock and is long TEVA. He has no position in any other stock mentioned as of 12/2/07.

Big pharma? Generics are the way to go originally appeared on BloggingStocks on Sun, 02 Dec 2007 13:10:00 EST. Please see our terms for use of feeds.

Today marks the first time that Google (NASDAQ: GOOG) has touched upon the magical market capitalization figure of $200 billion. This is the company that will be the centerpiece of every MBA class 20 years from now, if not sooner. We have never seen anything like this before in the annals of the American stock market, nor anywhere else in the world. The stunning achievements of this 9-year-old company pale in comparison to where it is going to be in 3 years, 5 years and 10 years. Yes, the stock is still a buy -- actually a strong buy.

Traditional analysts and investors have attempted to put traditional barriers on Google when analyzing it. Can't do that, not going to work. Why? Because the world in which Google competes and dominates is so evergreen, that trying to put traditional growth numbers to the industry is nearly impossible. Google doesn't sell a physical hard product that requires delivery, set-up and training (although a Google phone is on the horizon). It operates in a virtual world -- and that's why many analysts and investors have tried to "temper" expectations. Temper is a fancy word for they haven't understood the story, have missed the story, and this is why it could become the first trillion dollar market-cap company.

Continue reading Game Changer: Google hits $200 billion market cap -- is $500 billion in sight?

Game Changer: Google hits $200 billion market cap -- is $500 billion in sight? originally appeared on BloggingStocks on Thu, 11 Oct 2007 17:00:00 EST. Please see our terms for use of feeds.

Apple (NASDAQ: AAPL) is an extraordinary company that has rebounded with tremendous might over the past couple years. Apple's innovative genius is stretching to newer markets every year, starting with the iPod revolutionizing the MP3 player market, and more recently into the laptop market. Apple's Macbook and Macbook Pro laptop offerings are wildly popular amongst the entire U.S. consumer market for their ease of use, stylish appearance, and convenient size. Apple's computer segment is most likely going to continue growing, and many expect the company to launch an upgraded desktop computer within a few months. Oh, and we can't forget the iPhone, Apple's latest and greatest product offering that had a very successful launch about a month ago.

Shortly, Apple's financials for the quarter are going to hit the wires. Like many Wall Street analysts, I believe Apple will probably deliver an above-guidance/consensus earnings and revenues figure.

Anyone who reads my content knows that I'm a strong believer that trading and investing require different mind-sets. People interested in making a trade on the long side in Apple probably will make out well through earnings, but I'm not planning on getting long the stock simply because I think a consensus-slashing earnings report is already widely-expected on the street, and therefore priced in.

After saying all this, I still have a guilty confession: I don't think Apple is going to be a good purchase for long-term investors who believe that this growth can go on forever or that the current valuation on the stock is justified. While I would never short the stock because shorting only on value is a losing proposition, I think investors need to be aware of the risks in this seemingly effortless investment.

See also:
Brian White: Apple sees new 52-week price target of $175 and up
Brian White: Apple up 14% since iPhone launch
Georges Yared: Apple outlook: Why AAPL is on its way to $200
Peter Cohan: 7 Wonders of the Investment World

Continue reading Apple: The problem with Brian White's (and Wall Street's) Thesis

Apple: The problem with Brian White's (and Wall Street's) Thesis originally appeared on BloggingStocks on Sat, 21 Jul 2007 17:10:00 EST. Please see our terms for use of feeds.

Continue reading Discounted cash flow and valuation

Discounted cash flow and valuation originally appeared on BloggingStocks on Fri, 20 Jul 2007 17:16:00 EST. Please see our terms for use of feeds.

Continue reading Apple's valuation due for a dip

Apple's valuation due for a dip originally appeared on BloggingStocks on Mon, 02 Jul 2007 13:04:00 EST. Please see our terms for use of feeds.

According to the Wall Street Journal (subscription required), more than half of this year's IPOs have been for companies that are unprofitable, the largest percentage in 7 years: since when the dotcom bubble burst. The piece points out that the unprofitable IPOs are more diverse than they were then, and investors are looking to companies that at least have a shot at being profitable at some point in the near future.

While there may be reasons to be worried about the optimistic climate on Wall Street, the recent run of unprofitable IPOs probably isn't one of them. Even though the companies may not currently be profitable, investors are at least examining them for sign of improving fundamentals. This isn't a case of pie in the sky optimism, with investors paying huge sums for companies with no revenues or hope of profitability.

The continued strength in private equity may indicate that markets have more room to run: Buyout firms are seeing value in many different industries.

So while it might be tempted to see a rise in unprofitable IPOs as a sign of the apocalypse, I think that would be an over-reaction.

Unprofitable IPOs soar -- Should you care? originally appeared on BloggingStocks on Tue, 05 Jun 2007 18:17:00 EST. Please see our terms for use of feeds.