Innovative Food Holdings Inc (IVFH)

[BornAgain]

What Is IVFH Worth?

If we use the valuations given above which are based on current market valuations of comparable companies, recent M&A and venture capital activity, and we also assume a fully-diluted share count of 34 million (given in most recent conference call), IVFH shares would be worth $9.65.

However, as I stated earlier, I am a value investor. I personally find it nearly impossible to justify a valuation of 10 X sales for any company under normal circumstances. Given the lack of history operating as a public SEC filing company, and therefore the inherent lack of audited historical financial results to analyze, I am viewing the multiples recently given to meal delivery companies by venture capital firms with extreme caution in relation to applying a similar multiple to The Fresh Diet. This isn't because I think that The Fresh Diet is inferior to its competitors. Quite the opposite... I definitely think that The Fresh Diet is the best positioned company in the industry. I also like the fact that most of the companies being valued at 10 X sales in recent venture capital transactions aren't even profitable. I am just trying to be very conservative with my valuation in respect to The Fresh Diet until we can analyze the financial results of the "new" IVFH going forward.

I view IVFH's specialty food distribution business as being worth around $2.30 per share. The Fresh Diet could be worth a ton of money, but until it shows the market the financial results to prove its worth, I can't assign too much value to them just because I am conservative and hesitant of acquisition multiples based solely on sales and not some level of cash flow generation. I am assuming a value of The Fresh Diet of 2.5 X sales or $1.85 per share, which is essentially an arbitrary multiple, but it is definitely extremely conservative compared to all of the valuations earned by comparable companies in recent transactions.

Based on all of this, I think IVFH shares are very cheap below $4.15. I would quickly increase this number if The Fresh Diet started to show some signs of EBITDA growth, but this I will need to see before I assign an "intrinsic value" to it with any sort of conviction.

I have no lack of confidence in The Fresh Diet's management team and I believe that we could soon find out that it is worth significantly more than the other pieces of IVFH, but for now I am just in wait and see mode with The Fresh Diet.

For complete report...
http://seekingalpha.com/article/2546385-innovative-food-holdings-undervalued-gem-in-a-red-hot-sector?app=1&uprof=46