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SWBI, upgrade to 154 dollars
Current, target price 35, 154 (+343%)
July 1st, 2021
1 minute read
Sales jumped
Costs, stronger margins
1 minute read
Sales jumped
- Sales jumped by 25% in the first quarter to 323 million dollars which is above our forecast 296 million dollars.
- This brings the average quarterly growth to 9%.
- We predict average growth of 6% in this next 12 months to bring sales to 398 million dollars in the first quarter 2022.
Costs, stronger margins
- The cash cost ratio of net profit add mom cash costs minus sales as a percent of sales was down to -70% in the first quarter & profit was up to 89 million dollars.
- Average quarterly costs are now at -75%.
- We use lower -73% costs to predict a 100 million dollars net profit in the first quarter of 2022.
Cashflow, rising
Balance sheet, turning net cash
Value, upgrade to 154 dollars
- Cashflow doubled up to 115 million dollars with flat investment spending of -3 million dollars in the first quarter.
- Average quarterly Cashflow is steady at a higher 73 million dollars.
- We use the same -3 million dollars investment spending which with higher sales gives a 105 million dollars cashflow in the first quarter 2022.
Balance sheet, turning net cash
- With positive cashflow, cash increased from 60 to 113 million dollars in the first quarter.
- Liabilities increased from 168 to 180 million dollars so net cash improved from -108 to -67 million dollars.
- With our forecast higher cashflow & assuming there’s a -271 equity payout, net cash will turn positive to 71 million dollars in 12 months time.
Value, upgrade to 154 dollars
- SWBI capital from the last six years jumped to 459 million dollars in the first quarter & is forecast 763 million dollars in 12 months.
- At the current market value of 1,666 million dollars, based on our forecasts, it’s at 1.08X sales & 3.15X assets with a 16% yield.
- Our free cashflow forecast is 410 million dollars. At 18X (5.6% yield), this gives a 343% higher target price of 154 dollars.