Continental Materials Corporation (CUO)

[littlefish]

I put this over on yahoo board, figured I'd share it here as a ballpark way to value company if it were to be acquired in whole or part. Not at all expecting them to be acquired. Pretty sure the Gidwitzes have plenty of energy and involvement still with the businesses. But if they got to a market cap of $120 million, that would be over a 400 percent increase from here.

CUO CACS segment alone worth $60 million, whole CUO company possibly worth $120 million?
The company employs an investment bank firm mentioned in their 10Ks that used 3 quantitative tests to reach a valuation of the CACS segment:

"...For purposes of measuring the fair value of the CACS reporting unit the Company engages the services of an investment banking firm to assist management with the calculation. The fair value of this reporting unit is determined by applying three valuation methods. These are 1) discounted cash flow (“DCF”) valuation, 2) an analysis of comparable transactions within the industry and 3) comparable enterprise valuations of other public companies in the industry. The DCF valuation was calculated using a discount rate of 13%. The simple average of EBITDA (earnings before interest, taxes, depreciation and amortization) multiples of select transactions in the construction materials industry in the last couple of years was used for method #2 and the simple average of EBITDA multiples of select publicly traded construction materials companies comparable to CACS was used for method #3. The simple average of the valuations under the three methods exceeded the carrying value on the Company’s books by over 89%."

So the three quantitative measures arrived at a simple avg price 89% above the carrying value of CACS segment on the books for CUO. I saw their segment assets carrying value on the books was almost $32 mill.

Putting an 89% premium to that gets us to a valuation of just over $60 million for CUO's CACS segment.
Considering all of CUO is valued at not even $30 million, it seems off that valuation we are buying shares of the entire company at less than half what CACS alone is worth.

Considering HVAC segment has been profitable for some time and has valuable assets as well including knowledgeable people, equipment, land and buildings among other things, one might say the HVAC segment is worth as much as CACS.

That could put valuation of whole company over $120 million potentially.

I could be wrong. All IMO only. Do your own DD. Less