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A Three-Stage Free CF model was utilized to determine the intrinsic value of LL. Taking into account the economic realities discussed previously the forecast stages of growth began with a period of little to no growth as the economy continues to weaken and slowly rebound. There is then a four year period of rapid growth as the world economy improves. The final period steadies to a rate based upon historic GDP annual growth. The short-term growth rate is expected to be 1.0% based upon economic uncertainty and further cash flow that will likely be invested to further develop foreign relationships. The second period growth rate was estimated to be 4.85% based upon a weighted GDP growth estimate from IMF forecasts for the five countries in which the company markets its products. The final period is based upon a conservative 2.0% according to historic annual GDP growth.


A complete analysis demonstrates that the recent strategic decisions and worsening of the worldwide economy will have a negative consequence on the profitability of LL. The poor return to investors last year and uncertainty incorporated to the model assumptions discussed previously suggest many scenarios in which LL is overvalued as undervalued. In summary, a conservative nature thereby dictates a recommendation whether to invest.