Re: Lululemon IPO
It's not a shot in the dark. I see 67.5mm shares out @ $30 for a $2bn market cap. If you want a 10% return on a $2bn market cap then they need to eventually earn $200mm in net profit from now until the end of the world, if you want a 15% return they need to earn $270mm. In 2006 they had $148mm in total revenues and $7.6mm in net income. Assume they'll have 15% net margins, which would be pretty good for this business. They would need $1.33bn in sales to earn $200mm. Roughly 3x as big as Under Armour is. Yeah it seems simplistic but that is how the math works out and the math always wins in the long term.
|