I'm considering buying a "smart-fence" Company

V

vanzandt

It has things that sense your dog, the dog next door.... or any pet for that matter. Cameras that continuously upload imagery... and remote (mobile) control.
After labor and all the other costs.... it nets 120K/year.
He wants wants 4.8 Million for it. Is that worth it? I think its a bargain.
 
vanzandt said:
20X right?
After 20 years I'll own everything.
More...

This is not within my expertise and I don't have enough information to place a value. To pay even 20X, I would need a product that can't be copied with a very high growth rate. I'd even question 10X without protection and growth.
 
Hahahahah :D
Robert... I gotta admit.... I was just pulling everybody's chain.

I just wanted to make a point about PE and reality in this market.
When I see a gravel operation on the NYSE with a PE of 59....
I think people are losing sight of reality.
Of course you wouldn't buy the fence company that would take 20 years to pay off....even if you could grow it to all the neighboring cities.... and then some.
I could find 1000 stupid stocks like this.....
Common sense... thats what Buffet has.
Thats how you get rich.
 
Valuations fascinate me.

I think when evaluating the stock of a particular company its important to remember the "real world" valuations as if you were actually buying the company.

A profitable small manufacturing operation can be had for 2X profits plus tangible assets.
Putting a valuation on growth potential is difficult depending on the product.

A mom and pop retail store gets an earnings multiple between .75 and 1.5. plus inventory and other tangible assets

A contractor (plumbing, HVAC, Electrical) gets at the most 2X net sales plus equipment and inventory.

Now software (intellectual property) is a different game of course. The gift that keeps giving.

Kevin O'Leary on Shark Tank will never take an equity position in a start-up that will require more than 2 years for him to re-coup his initial outlay. That's a PE of 2 right?

But people pay enormous sums for stocks without batting an eye. Its like we've lost sight of the fact that in the end, you are buying a company. Or a piece of it.
 
vanzandt said:
Valuations fascinate me.

I think when evaluating the stock of a particular company its important to remember the "real world" valuations as if you were actually buying the company.

A profitable small manufacturing operation can be had for 2X profits plus tangible assets.
Putting a valuation on growth potential is difficult depending on the product.

A mom and pop retail store gets an earnings multiple between .75 and 1.5. plus inventory and other tangible assets

A contractor (plumbing, HVAC, Electrical) gets at the most 2X net sales plus equipment and inventory.

Now software (intellectual property) is a different game of course. The gift that keeps giving.

Kevin O'Leary on Shark Tank will never take an equity position in a start-up that will require more than 2 years for him to re-coup his initial outlay. That's a PE of 2 right?

But people pay enormous sums for stocks without batting an eye. Its like we've lost sight of the fact that in the end, you are buying a company. Or a piece of it.
More...
You do need to remember that valuation on a startup is a different universe from valuation of a publicly listed company. The (highly oversimplified) VC model is that you make 100 investments fully expecting 80 to fail completely, 10 to be "zombies" which is what the rest of the world calls a moderately successful company but is a failure for them because they don't get a 9 figure exit, seven or eight 9 figure exits that pay the bills, and if they're lucky one or two or three unicorns that make them rich. So you don't care at all about "getting your money back in x years", that would be a zombie which they hate almost more than a fast failure because it sucks up their time. You only care that there is some potential for the company to have at minimum a $100M+ exit in a reasonably short amount of time. That makes concepts like PE completely inapplicable to that model. There's certainly debate over the model, but be careful not to conflate it with public company investing, they're really in different universes.
 
vanzandt said:
It has things that sense your dog, the dog next door.... or any pet for that matter.
More...

I thought you meant an electric fence, or a dog collar that gives a slight, small zap when it crosses the imaginary line/fence.

...I was about to say you could Make a Killing in the Shock Market.

Call me presumptions, but when you said the asking price for that business was 4.8 million...I knew you were faking. You don't have multiples of millions. Let alone a million.
This is ET. no one does. o_O

Judging a company strictly by its PE ratio is not that great to use...because by that measure, Amazon had a PE ratio of like 200x earrings not that long ago. It would have been kind of silly to call Amazon a shitty, overrpriced company that's bound to tank and go nowhere.
 
Last edited:
Lugar.... you say the stupidest things sometimes.
Example:

lawrence-lugar said:
Judging a company strictly by its PE ratio is not that great to use...because by that measure, Amazon had a PE ratio of like 200x earrings not that long ago. It would have been kind of silly to call Amazon a shitty, overrpriced company that's bound to tank and go nowhere.
More...

The world friggin knows AMZN and NFLX have no earnings. And what is the number one discussion about them by nay-sayers? Earnings. You pick one example out of 8000 publicly traded companies and generalize an age old metric that is studied and taught in every MBA program and every book ever written on the stock market and say "its not that great to use"... That is just f'ing dumb dude. Dumb.

Example 2:
lawrence-lugar said:
...I knew you were faking. You don't have multiples of millions. Let alone a million.
This is ET. no one does. o_O
More...

You have no idea what I, or anyone else on ET has. Again, dumb like a f'n stump.
 
You must log in or register to reply here.
Back
Top