Happy to. I merely try to think about reasonable expectations for the next few years. ELF will do probably over 1B this year with a 20%+ net margin (or FCF margin if you prefer). So that’s 200m+ in profit. At a 50 PE that’s a $10b company.
Is a 50 PE too much? Depends what they’ll do the next few years. They’re growing at 75% or 85% now…I don’t expect that to continue. If they grow at even 40% next year for 1.4b in revenue and 280m in profit, even a 40 PE would mean they’re worth $11.2b. Maybe the profit margin improves to 25% aka 350m and a PE of 40 gets you to $14b.
These are all back of napkin type numbers.
You can try out different PEs and different growth rates, but for ELF to be, say, a $20b company, you’d need to assume a lot of growth and or improvement in profit margin. It’s really pretty reasonable to see them getting there in 2 or 3 years. But it’s a large number to put on them today. You’d be paying for a lot of future growth.
Hope that helps.
Bear