The Company Could Be Worth $90
$Sonos (SONO.US)$ In my opinion, if management successfully increases brand awareness in new or existing geographic markets, sales would increase. In the most recent annual report, SONO noted that it intends to expand into new countries employing country-specific marketing campaigns and new distribution channels. I believe that what is working in the United States, will most likely work elsewhere. With this in mind, I would be expecting sales growth close to 15%.
I am also quite optimistic about the R&D team as well as the company’s ability to develop new software and hardware products. In my view, if the new features meet customers’ demands, revenue growth could increase significantly.
SONO has already delivered successful products like the Sonos app. In addition, the company has the ability to use Alexa and Google voice services as well as the Trueplay tuning. Taking into account the previous technology design, I would be expecting more innovation in technology soon. In this regard, I recommend investors to read the comment below:
We believe our research and development capabilities and our intellectual property differentiate us from our competitors. We intend to continue to significantly invest in research and development to bring new products and software to market and expand our platform and capabilities. Source: 10-K
Taking into consideration that my assumptions are more optimistic than those in my previous case scenario, I used a sales growth of 15.5% and a CFO margin of around 15.5%. With capital expenditures increasing from $55 million in 2021 to more than $200 million in 2031, the FCF would be equal to $200-$700 million.
With a long-term growth of 9.5% and 2032 FCF of approximately $820 million, the implied enterprise value would be equal to approximately $10 billion. Finally, with a share count close to 125 million, the implied price would be equal to $90:
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A1EIIWLU1C : I can not find that they have any competition...
oXrssHBsXw : The international market is already partly accounted for in their projections with the private label partnership with IKEA. I believe this is a great strategy for building the brand as the IKEA units are OPP units and get them into the homes. When people look for an upgrade then Sonos will already have brand loyalty. But the opportunity from this is probably a couple of years down the road.