Victory believes the newly merged entity of Victory and Fin will have sales of $100 million in 2014. Assuming Victory can reach $500 million in revenues by 2018, applying an enterprise value-to-sales of 3.2 times would lead to a fair enterprise value of $1.6 billion. Victory's current enterprise value is $654 million leading to upside of 144% over the next five years, or a 20% annualized return.
Vapor had sales of $23 million over the trailing 12 months. Assuming Vapor is able to double revenues to $50 million in 2014, and --like Victory -- has a fivefold increase in revenue over the next five years, at the end of 2018 Vapor's revenue will be $250 million. Applying an enterprise value to sales of 3.2 times, Vapor's fair value in 2018 is roughly $800 million. With a current enterprise value of approximately $100 million, Vapor's up side is 660% over the next five years, or a 46% annualized return.
At the time of publication, the author held no positions in any of the stocks mentioned. Follow @hashapi This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.
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