Let's assume that Yahoo! can actually show some double-digit revenue and earnings growth next year and do a YJ-type 22% growth in net income. That's $1.55 in EPS at the old share count or $1.86 billion in earnings.
On an 850 million share count, that $1.86 billion in earnings becomes $2.19 in EPS or almost double the current estimate.
At a 10x multiple of $1.86 billion in earnings, Yahoo! would be worth nearly $11 billion. At the moment, net of its Alibaba stake (at a $60 billion valuation and post taxes), its YJ stake, and its cash, Yahoo!'s core business is being valued at $1.43 billion.
Yahoo!'s stake in YJ is nothing to sniff at. And it might be a key catalyst for Yahoo this year.
At the time of publication, the author was long YHOO.
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