Famous Antisocial Humans

MTY Food Group (CVE: MTY)

That finally my own analysis of MTY. I know some people are eager to see if my conclusion on the title has changed. Here are the assumptions that I sent (who knows, maybe you have best idea or it could help improve your designs):

• First, I noticed that, historically, the operating costs (admin, marketing, etc..) represent between 61 and 64% of sales (average 62%).
• The tax rate is between 30 and 32% with an average of 31%.
• Historically, quarterly sales following equation: Sales = 2.55 + 0.228 LTA-1. In this equation, LTA-1 represents the book value of long-term assets over the previous quarter. I do not use this equation to model MTY, but I noticed that the equation was thrown in my data. (Those who want to know the Rcarré of the equation is 88%)

Those are figures based on the past. For others,

• annual sales growth of 22%. It comes from organic growth of 5% (based on the objective of the company to open 75 new schools), a 15% growth through acquisitions and rising prices (inflation) of 2%.
• To achieve the objective of growth through acquisition of 15%, MTY will make acquisitions to increase by about 25% per year long-term assets (ie $ 20M this year ... up $ 32M in 5 years ).
• I also assume that all acquisitions are profitable and that no revision of goodwill is required. Note that this assumption may seem strong, but I must admit that Stanley seems to take my time to make a roadmap without fault.

I also tested a model in which I have made no growth by acquisition. This model was intended primarily to see if the stock remains attractive where MTY took years to find an interesting company in which to invest. Sorry for the big fans, but not growth by acquisition (or a BIG house development shops ... like 75 per quarter), the Title is not worth much. My ticket is already pretty long, I'll avoid going any further in this worst-case scenario.

Statement
Here is the statement (click to view larger). Basically, Y-1 is estimated at three months and Y-2 Y-5 follow the main principles decry before. I have no complaints about the rest.

Review
The record was built inverted. That is to say that I have included the figures would be accurate to observe the relationship between the income statement and balance sheet (or shareholder's equity section). Level of debt, I assumed a growth in accounts payable to support business growth, but no other form of indebtedness. This allows me to find the value of my assets (debt + equity).

I maintain the cash position to 1-2 million by putting everything in the short-term investment, but for me, 2 are the same case. Goodwill is included in "Other assets" and is indicated only for presentation purposes. (Actually, I use it for other calculations and was too lazy to remove it before doing a print screen!)

Here is the link for the report I wrote:
http://sites.google.com/site/financialanalysisjournal/mty-food/04-19-2010-MTY.pdf


I want to reiterate that I can not be held responsible for your investment decisions. If my report helps you build a good idea, but I can not be held responsible for your future losses (because if I were, I would also be held responsible for prizes!).

Those who want to know what are my models in my assessment, my next few posts (in the coming weeks) will tour models used in finance and I will indicate my favorite. For the curious, my target price is based on MTY 6 models that seemed to converge!