NEW YORK, July 27 (Reuters Breakingviews) – Weber and Traeger, makers of luxury backyard grilling equipment, are leaving something on the table for investors in their upcoming initial public offerings. The dueling BBQ brands are seeking equity valuations of $4.6 billion and $2 billion, respectively.
That gives them enterprise values of about 2 times their estimated revenue for this year, assuming their growth fades to half their recent, pandemic-seasoned rate read more . Newell Brands (NWL.O), which makes Campingaz grills, trades at 1.6 times estimated sales, but cooler-maker Yeti (YETI.N) is valued at 6 times.
True, each has its own flavor of risk. Traeger’s business is limited to one type of grill that is powered by wood pellets, which aren’t the most environmentally friendly of fuels. Weber’s IPO will leave 71% to 74% of the voting power with some pre-IPO shareholders.
Both businesses are still fast growing, though. During the height of the pandemic, from April 2020 to February 2021, sales of grills and smokers increased 39%, according to NPD. Traeger and Weber grew sales much faster in the six months to March 31. It’s rare to find companies with hot growth served lukewarm. (By Amanda Gomez)
On Twitter http://twitter.com/breakingviews
Capital Calls – More concise insights on global finance:
Singapore’s GIC looks for lab rat liquidity read more
Just Eat Takeaway’s activist has a full plate read more
Duolingo IPO valuation doesn’t translate read more
SoftBank tries to turn dog into unicorn read more
Mediobanca reaches for low-hanging wealth fruit read more
Editing by John Foley and Marjorie Backman
Reuters Breakingviews is the world’s leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.
Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.