Mega Brands to $.75?

[jjsto]

Assumptions:

 

1) Modest sales growth (or better) actually occurs this year.  All the statements from management that I have seen (articles and filings) point to higher sales this year.  So, say 2010 sales conservatively come in +/- $375 mil.

 

2) Margins are strong enough to produce net earnings of +/- $35 mil. (Of course with all credit for declining costs going to the VEP)

 

3) There are no recalls, lawsuits, or extraordinary one-time events.  (If it wasnt for bad luck...)

 

In this scenario at u$s .75 (year end 2010) you would have a market cap on a fully diluted basis of u$s 428 mil.  If you add in outstanding debt that would give an enterprise value of $ 568 mil, more or less.  Relative to the (golden) 2003-2004 era when sales were 220-234 range, earnings 25-28, and enterprise value 480-560, it would appear to be relatively cheap even at $.75.  Plus, you have the added bonus that management probably wont be aggressively pursuing any type of sizable acquisition any time soon.  Instead, they should be back focused on recapturing shelf space and expanding sales, particularly international.

 

Conclusion:

At the current .45-.50 range the stock seems moderately attractive.  Unless I am missing something?  Thoughts?

 

Also, does anyone have any idea how sales breakdown within the toys  and/or stationary products segments?