Gillies: As someone who’s set up one of two giant PCF models, that’s some few hours I never going to get back, but you want to start getting an appreciation. So if I tell you that Starbucks is trading at six times revenues, but pre-pandemic, it was trading at about 2-3 times revenues for most of that time, you start to say, well, then the question is, how depressed are current revenues that given the higher multiple or is this higher multiple a sign of investor exuberance? There’s probably a little bit of both in there. But you start thinking about the valuation and it’s like, well, does this thing look 2-3 times revenues again or which is about, I’m just going to eyeball it, 15-20 times EBITDA? Does Starbucks go back there once we have a full reopening, post-pandemic reopening? It’s probably reasonable to guess that it will. So you start layering it, what strategy do I want to do? Bowman: We’re not here judge people. If that’s the thing you feel like doing, then you could.
Gillies: Okay, cool. Starbucks, it’s a big company, about $130, $135 billion dollars company. It is a company that people visit on a daily basis, a lot of people. Occasionally, I visit on a daily basis when Ontario is not locked down. Lots of small dollar figure transactions, but they’re selling an addictive product that people crave daily. It’s a good business, a lot of cash flowing through there, but it’s not a small business anymore. Well, that will also inform what choices and strategies you’d like to use. It. From a valuation perspective, you could set up a big discounted cash flow model, if you hate yourself.
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