He doesn’t care for its sandals, but Professor Aswath Damodaran (New York University Stern School of Business) has taken a great interest in valuing the intangibles of footwear company Birkenstock. Ahead of its recent IPO, Damodaran did a valuation of the company and examined what he views as the firm’s four main intangibles: brand name, strength of the management team, a celebrity customer base, and the Barbie Buzz (pink sandals appeared in the big blockbuster movie).

‘IT’ man: Damodaran hasn’t done much teaching or writing on valuing intangibles, so it’s interesting to see his thought process, which he grounds in his overall “IT” proposition, that is, for “it” to have an effect on value, it must have an impact to either cash flows, risk, or growth. He uses this proposition to assess everything from inflation to ESG. For example, he concludes that Birkenstock’s brand name has the biggest effect on value, resulting in an annual operating margin of 23% to 25% over the next five years. Without the brand name, he believes the operating margin would be 14.74%, which is the average for the entire apparel/footwear sector.

You can read his full valuation if you click here.

Postscript: Since its IPO debut, the stock has lost its footing, falling below what Damodaran considered to be the price at which he would be a buyer—although he still won’t buy its sandals.