TARGET PRICE AND RATIONALE: $20.06 (20% upside)

DCF

: Management has been traditionally very conservative in their guidance, and believes they will see

“high single digit” sales growth, which analysts estimate to be around 9.5%. Being even more

conservative, I used 9% in each stub period. The operating margin used was 8.0%, based on

management’s belief that operating income will grow in the mid

-teens this year. Management also guided capex to an unusually high number due to its ongoing investment in capacity growth. In addition to this, a WACC was calculated

using the company’s target capital structure (20/80), the equity market

risk premium (6.7%) was estimated using the mean unlevered beta of comparable companies and a

market risk premium of 7%, and D ean Food’s cost of debt (4.6%) was used, which is undoubt

edly higher

than WWAV’s true borrowing cost due to the fact that their interest coverage ratio is much lower. After

discounting back all of the cash flows by the WACC, including the terminal value which calculates 2.5% perpetuity growth , I subtracted the present value of all debt and off-balance sheet commitm ents and determined the fair value of the company to be approximately $20.42.

DCF base case: 9.0% sales growth, 8.0% operating margin =

$20.42

Relative Value/Break-Up Analysis

: In performing this analysis, I used a wide range o f comparable companies, ranging from General Mills to Hain Celestial. There were several multiples used: Forward P/E, EV/EBIDTA, and EV/Sales, etc. What I found is that WWAV was trading in the bottom of the group for every sales multiple as well as PEG, and that EV/EBITDA , while in the middle, was significantl y below the organic food companies. Which brings me to my point: not only is the company valued significantly below its peers based on sales, which includes companies that are over ten times bigger, but many see WWAV as a diversified food company. The company derives 64% of its sales from what it considers to be natural, health-conscious foods. The problem is that since WWAV was spun off from DF, many see it as a company related to DF in its products, when in fact it is not. HAIN, BNNY, and BDBD are the three closest organic food product companies, and the multiples for these organic companies are much higher than the traditional food industry because they offer better growth prospects, in line with that of WWAV. As

mentioned above, two of WWAV’s businesses, plant

-based beverages and premium dairy, are considered natural, healthy alternati ves. They comprise 64% of total revenues and were valued using

the organic industry’s multip

les. The remaining 36%, coffee creamers, was valued using the traditional packaged foods industry multiples listed below.

So, for the base c ase, I applied the organic industry multiple (19.4) to 64% o f the company’s

currently depressed EBITDA and the traditional packed food industry multiple (11.7) to the remaining 36%, resulting in a 16.6x multiple, to arrive at a price of $19.71 (+18%). The downside scenario is if the company is valued as a large traditi onal food company; applying the 11.7x multiple gives us a price of $12.48 (-25%). The upside scenario values the company at the organic multiple of 19.4x, resulting in a price of $23.78 (+42%). Relative Value base case: 16.6x EV/EBITDA =