The valuation question
MrAkhmed Apparel is an original concept associated with Aref M. Bajwa. Every subject-company operating figure, projection and valuation output below is hypothetical and created for educational analysis.
As of Aug. 21, 2026, estimate its standalone value and determine what premium or discount to comparable companies is justified by relative growth, EBITDA margin, cash conversion, scale, leverage and execution risk.
The business on one page
For this teaching case, the hypothetical business sells denim, outerwear and basic sportswear through its website, 38 stores and a small wholesale channel. Revenue grows, gross margin improves and cash flow turns positive. The financial statements tell a coherent story. They do not produce one inevitable price.
Illustrative historical income statement
| $ in millions | 2023A | 2024A | 2025A | LTM June 2026 |
|---|---|---|---|---|
| Revenue | 180.0 | 205.0 | 244.0 | 270.0 |
| Growth | — | 13.9% | 19.0% | 10.7% vs. FY25 |
| Gross profit | 91.8 | 107.6 | 131.8 | 147.2 |
| Gross margin | 51.0% | 52.5% | 54.0% | 54.5% |
| EBITDA | 10.8 | 17.4 | 27.0 | 32.4 |
| EBITDA margin | 6.0% | 8.5% | 11.1% | 12.0% |
| Net income | 2.4 | 6.7 | 12.9 | 16.4 |
Cash flow and capital position
| $ in millions | 2023A | 2024A | 2025A | LTM June 2026 |
|---|---|---|---|---|
| Cash flow from operations | 4.2 | 8.2 | 13.7 | 17.0 |
| Capital expenditures | (4.8) | (5.4) | (6.5) | (7.0) |
| Free cash flow | (0.6) | 2.8 | 7.2 | 10.0 |
| Cash | 8.0 | 9.5 | 11.0 | 12.0 |
| Total debt | 38.0 | 41.0 | 44.0 | 45.0 |
| Net debt | 30.0 | 31.5 | 33.0 | 33.0 |
Derived markers: 2023–2025 revenue CAGR 16.4%; EBITDA CAGR 58.1%; LTM FCF / EBITDA 30.9%; net debt / LTM EBITDA 1.0x.
Historical public-company reference points
LEVI is the primary operating reference. TPR and RL provide context for scaled branded businesses. KTB is excluded from the operative set because its latest presentation classifies Lee as discontinued operations and a comparable LTM continuing-operations denominator has not been recast.
| Company | Role | Price* | EV* | LTM revenue | EBITDA | Margin | EV / EBITDA |
|---|---|---|---|---|---|---|---|
| LEVI | Primary | $21.49 | $8.4bn | $6,613.7mm | $973.6mm | 14.7% | ~8.6x |
| TPR | Context | $130.17 | $27.2bn | $7,989.6mm | $2,082.2mm | 26.1% | ~13.1x |
| RL | Context | $372.59 | $22.1bn | $8,355.2mm | $1,484.4mm | 17.8% | ~14.9x |
| KTB | Excluded | $82.01 | $5.6bn | N/M | N/M | Q2: 17.6% | N/M |
* Prices are Tiingo historical closes. Issuer or exchange verification of the Aug. 21, 2026 closes remains a limitation. EV excludes operating leases. LEVI uses issuer-adjusted EBITDA; TPR and RL use EBIT plus D&A. Rounded values produce approximate multiples.
The evidence supports the direction of a discount for scale, margin and cash conversion. It does not determine an exact discount magnitude or validate a peer median.
Balance sheet and enterprise value
The income statement cannot be valued in isolation. Cash, debt, leases and other claims determine how enterprise value translates into value attributable to common shareholders.
| Enterprise-value bridge | $mm | Treatment |
|---|---|---|
| Conditional equity value | 268.4 | DCF base assumption |
| Add: total debt | 45.0 | Interest-bearing claim |
| Add: lease liabilities | 24.0 | Shown separately |
| Less: cash | (12.0) | Non-operating cash |
| Enterprise value | 325.4 | Including leases |
| Operating enterprise value | 301.4 | Excluding leases |
The DCF and comp EVs exclude operating lease liabilities, and their EBITDA metrics are not rent-adjusted. Net debt is $33.0mm. Whether $9.0mm of other liabilities is debt-like remains unresolved.
Discounted cash flow
The base case uses a conditional 11.9% WACC and 2.5% terminal growth rate. Only the 4.74% Treasury yield is an observed market input; beta, equity risk premium, company risk premium, debt cost, tax rate and capital weights are illustrative case assumptions.
| $ in millions | 2027E | 2028E | 2029E | 2030E | 2031E |
|---|---|---|---|---|---|
| Revenue | 296.0 | 325.0 | 354.0 | 382.0 | 409.0 |
| Growth | 9.6% | 9.8% | 8.9% | 7.9% | 7.1% |
| EBITDA | 37.9 | 43.9 | 50.3 | 56.5 | 62.2 |
| EBITDA margin | 12.8% | 13.5% | 14.2% | 14.8% | 15.2% |
| Unlevered FCF | 18.454 | 21.968 | 26.068 | 30.146 | 33.825 |
| DCF summary | $mm |
|---|---|
| PV of forecast free cash flow | 91.1 |
| PV of terminal value | 210.2 |
| Operating enterprise value | 301.4 |
| Less: net debt | (33.0) |
| Equity value | 268.4 |
| Diluted shares | 20.0 |
| Implied value per share | $13.42 |
Change in NWC equals 10.37% of each year’s revenue increase. Terminal value implies approximately 5.9x 2031E EBITDA. PV of terminal value is 69.8% of operating EV, making terminal assumptions the principal concentration risk.
Illustrative comp range
MrAkhmed is materially smaller and has lower EBITDA margin and cash conversion than each validated reference. That supports the direction of a discount, but not its exact magnitude.
| Teaching range | Low | Midpoint | Upper bound |
|---|---|---|---|
| Implied EV / EBITDA | 9.0x | 9.5x | 10.5x |
| Enterprise value | $291.6mm | $307.8mm | $340.2mm |
| Less: net debt | (33.0mm) | (33.0mm) | (33.0mm) |
| Equity value | $258.6mm | $274.8mm | $307.2mm |
| Value per share | $12.93 | $13.74 | $15.36 |
The 9.0x–10.5x range and 9.5x midpoint are explicit teaching assumptions, not an empirically fitted discount or a concluded valuation.
Questions answered
Should the smaller, less-profitable subject receive the same multiple?
No automatic equality is warranted. Lower scale, margin and cash conversion support the direction of a discount. The evidence does not establish an exact discount percentage.
How much value depends on future performance?
The DCF assumes revenue reaches $409.0mm, EBITDA reaches $62.2mm and EBITDA margin reaches 15.2%. Approximately 69.8% of base operating EV comes from discounted terminal value.
What belongs to the company today?
Current LTM earnings, the balance sheet and a risk-adjusted standalone forecast belong in the case. Integration benefits and buyer-specific synergies belong only in a separately quantified strategic-buyer case.
What is the takeaway?
The illustrative comp midpoint produces 9.5x LTM EBITDA, $307.8mm of enterprise value and $13.74 per share. The conditional DCF produces $301.4mm of operating EV and $13.42 per share. Their proximity does not make either answer certain.
Methodology and limits
Every MrAkhmed operating figure, projection, balance-sheet amount and valuation output is hypothetical. Public-company figures are historical reference points. Tiingo is the historical price source. KTB is excluded pending a continuing-operations LTM recast. The case is illustrative and educational only—not investment, tax, appraisal, transaction, or professional valuation advice.
Primary public sources
- Tapestry FY2026 Form 10-K
- Ralph Lauren FY2026 Form 10-K
- Ralph Lauren Q1 FY2027 Form 10-Q
- Levi Strauss FY2025 results
- Levi Strauss Q2 FY2026 results
- Kontoor Brands FY2025 results
- Kontoor Brands Q2 FY2026 results
- U.S. Treasury daily yield curve rates — August 2026
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