SIM Consumer Discretionary

Recap
10.04% of SIM portfolio is
consumer discretionary
 DTV at 3.75%
 EXPR at 2.29%
 GM at 4%
Voted to keep consumer
discretionary at same level
 1,004 basis points
Current Stocks in SIM
Possible Recommendations
 DTV
 COH
 EXPR
 F
 GM
 JAH
EXPR – Express Inc.

Sell 229 basis points
Current Price $23.71
Business Overview
 Apparel and accessories for women and men, 20-30 years
of age
 Specialty retail stores

Sales in U.S., Canada, Puerto Rico

Small presence in Middle East
 Saudi Arabia, Kuwait, United Arab Emirates
1-yr Performance
Versus S&P 500

Valuation Analysis
Relative to Industry High
Low
Median
Current
P/Trailing E
0.84
0.65
0.75
0.74
P/Forward E
P/B
P/S
P/CF
1.0
4.5
0.5
7.1
0.6
1.3
0.4
0.5
0.72
2.2
0.5
0.6
0.68
1.3
0.5
0.6
Relative to
High
Sector
P/Trailing E
1.1
P/Forward E
1.0
P/B
5.8
P/S
1.0
P/CF
10.4
Relative to S&P 500 High
Low
Low
0.7
0.7
1.8
0.9
0.9
Median
Current
0.9
0.8
3.5
1.0
1.1
Median
0.8
0.8
1.8
1.0
1.0
Current
P/Trailing E
1.3
0.82
1.1
1.1
P/Forward E
1.1
0.72
0.93
0.92
P/B
P/S
P/CF
6.9
0.9
9.6
2.7
0.7
0.9
4.7
0.8
1.1
2.7
0.8
1.1
Valuation Analysis
Absolute Valuation High
A.
P/Forward E
P/S
P/B
P/EBITDA
P/CF
B.
14.6
1.1
15.1
7.46
75.3
Low
C.
10.7
0.9
5.8
5.41
7.9
Median
D.
12.8
1.0
10.3
6.42
10.1
Target
E, S, B, Target Price
Current Target Multiple
etc/Sha
re
(F x G)
E.
F.
G.
H.
12.2
12.5
1.94
$ 24.25
1.0
1.3
25.4
$ 33.02
5.8
$ 25.28
8
3.16
5.97
6.2
3.83
$ 23.75
9.9
9.7
2.39
$ 23.18
Target Price
Method
P/B
P/S
P/E
P/EBITDA
P/CF
Target Price
Target
$25.28
$33.02
$24.25
$23.75
$23.18
 Target Price $25.90
 Current Price $23.71
 Margin of Safety $2.19, 9%
Weight
0.2
0.2
0.2
0.2
0.2
Target * W
$5.06
$6.60
$4.85
$4.75
$4.64
$25.90
Peer Analysis
EXPR
GPS
GES
URBN
Industry
Market Cap
2.11 B
13.66 B
2.36 B
3.97 B
1.12 B
Qtrly Rev Growth (YoY)
8.30%
-1.90%
2.50%
9.30%
4.10%
Revenue (ttm)
2.07 B
14.55 B
2.69 B
2.47 B
1.06 B
Gross Margin (ttm)
44.84%
36.25%
43.31%
41.71%
44.84%
EDITDA (ttm)
336.47
M
2.05 B
497.23
M
385.46
M
112.78
M
Operating Margin (ttm)
13.08%
9.99%
15.55%
11.51%
7.03%
Net Income Margin
(ttm)
6.80%
5.73%
9.79%
7.50%
6.45%
P/E (ttm)
14.5
17.8
8.6
23.3
19.6
PEG (5 year expected)
0.66
1.43
0.91
1.12
1.14
Risks and Opportunities
 Catalysts

Economy picking up

Economy remains as is
 Increase in disposable

Changing consumer tastes

Falling margins
income
 Increasing employment

 Risks
 Increase in commodity
Increasing market share
costs

Strong Competition
DTV - Directv

Add 125 basis points
Current Price $47.57
Business Overview
 Digital television entertainment
 Direct-to-home (DTH)
 Multi-channel, DIRECTV, SKY
 Satellite TV provider
 Operates in 2 geographic regions
 U.S.
 Latin America
 Argentina, Chile, Colombia, Ecuador, Venezuela, Caribbean, Brazil
 Game Show Network
 Professional and collegiate sports programing, regional too
1-yr Performance
Versus S&P 500

Valuation Analysis
Relative to Industry High
Low
Median
Current
P/Trailing E
4.5
0.52
0.96
0.82
P/Forward E
P/B
P/S
P/CF
1.2
25.7
1.4
1.8
0.77
3.4
0.7
1.1
0.98
5.1
1
1.5
0.8
N/A
0.9
1.4
Relative to
High
Sector
P/Trailing E
18.5
P/Forward E
7.5
P/B
19.1
P/S
3.0
P/CF
2.7
Relative to S&P 500 High
Low
Low
Median
0.3
0.3
0.9
1.1
0.7
Current
1.1
1.0
1.7
2.2
1.2
Median
0.8
0.7
NM
1.1
0.7
Current
P/Trailing E
21.3
1
1.3
1
P/Forward E
8.7
0.8
1.1
0.83
P/B
P/S
P/CF
23.6
1.7
2.3
0.7
1
0.7
1.5
1.3
1
N/A
1
0.8
Valuation Analysis
Absolute Valuation High
A.
Low
Target
E, S, B, Target Price
Median Current Target Multiple
etc/Sha
re
(F x G)
D.
E.
F.
G.
H.
B.
C.
P/Forward E
152.2
10.3
16.6
10.9
12.5
4.37
$ 54.63
P/S
P/B
2.6
55.5
1.2
2.2
1.7
4.2
1.2
N/A
1.3
N/A
43.81
N/A
$ 56.95
N/A
P/EBITDA
24.01
4.28
7.35
4..82
5.2
11.2
$ 58.24
26
5.7
10.2
6.9
8
7.3
$ 58.40
P/CF
DCF
DCF
 Implied equity value per share
 Upside to DCF
 Sensitivity Analysis
Target Price
Method
DCF
P/S
P/E
P/EBITDA
P/CF
Target Price
Target
$57.79
$54.63
$56.95
$58.24
$58.40
 Target Price $57.57
 Current Price $47.57
 Margin of Safety $10, 21%
Weight
0.70
0.08
0.08
0.08
0.08
Target * W
$40.45
$4.10
$4.27
$4.37
$4.38
$57.57
Peer Analysis
DTV
DISH
CMCSA
Industry
32.22 B
13.62 B
78.65 B
4.33 B
Qtrly Rev Growth (YoY) 11.50%
11.10%
22.70%
17.90%
Gross Margin
48.70%
42.90%
45.30%
48%
Operating Margin
17.00%
18.60%
22.40%
15.06%
Profit Margin
9.58%
9.23%
7.58%
8.00%
P/E (ttm)
12.95
10.21
18.12
14.97
PEG (% year expected)
0.63
7.89
1.04
0.83
Market Cap
 Comments
Risks and Opportunities
 Catalysts

High growth rate in Latin
America Segment
 Risks

Increasing competition

Increasing programming
costs

Exclusive Content

Share buyback program

Economic uncertainty

Strong brand and customer
service

Geopolitical risk
GM – General Motors

Sell 400 basis points
Current Price $22.00
Business Overview
 Major auto manufacturer
 Designs, manufactures and markets cars
 Consumer and fleet customers
 Daily rental car companies, commercial fleet customers, leasing
companies, governments
 4 product lines
 Buick, Cadillac, Chevrolet, GMC
 GM Financial Co
 OnStar®
1-yr Performance
Versus S&P 500

Valuation Analysis
Relative to Industry High
P/Trailing E
Low
Median
Current
2.2
0.94
1.6
1.0
P/Forward E
1.4
P/B
0.4
P/S
1.0
P/CF
1.7
Relative to Sector High
P/Trailing E
0.8
P/Forward E
0.7
P/B
1.1
P/S
0.4
P/CF
0.6
0.77
0.1
0.7
0.7
Low
0.91
0.2
0.8
1.0
Median
0.4
0.4
0.5
0.3
0.4
0.84
0.4
0.8
0.8
Current
0.3
0.4
0.4
0.2
0.3
Relative to S&P 500 High
Low
0.3
0.4
0.3
0.2
0.3
Median
Current
P/Trailing E
0.81
0.40
0.50
0.43
P/Forward E
0.72
0.42
0.51
0.45
P/B
P/S
P/CF
1.4
0.3
0.6
0.4
0.2
0.3
0.6
0.2
0.4
0.5
0.2
0.3
Valuation Analysis
Absolute Valuation High
A.
Low
Target
E, S, B, Target Price
Median Current Target Multiple
etc/Sha
re
(F x G)
D.
E.
F.
G.
H.
B.
C.
P/Forward E
10.1
4.8
6.9
6.0
6.5
3.68
$23.92
P/S
P/B
0.4
3.3
0.2
0.9
0.3
1.4
0.2
1.2
0.2
1.4
98.0
18.75
$19.60
$26.25
P/EBITDA
3.72
1.83
2.54
2.47
2.5
9.0
$22.50
P/CF
5.4
2.3
4.0
2.6
3
8.5
$25.50
DCF
DCF
Target Price
Method
DCF
P/S
P/E
P/EBITDA
P/CF
Target Price
Target
$32.00
$19.60
$23.92
$22.50
$25.50
 Target Price $29.72
 Current Price $22.00
 Margin of Safety $7.72, 35%
Weight
0.4
0.15
0.15
0.15
0.15
Target * W
$12.80
$1.57
$1.91
$1.80
$2.04
$29.72
Peer Analysis
GM
F - Ford
TM - Toyota HMC - Honda
Market Cap
34.09 B
39.80 B
126.88 B
60.81 B
Gross Margin
17.6%
15.9%
17.3%
32.2%
Operating Margin 4.7%
6.9%
1.0%
2.9%
Profit Margin
4.0%
4.8%
1.2%
2.6%
P/E (ttm)
6.55
2.21
70.79
22.91
ROE
22.9
67.9
2.0
4.8
 Comments
Risks and Opportunities
 Catalysts

Strong growth
internationally

Electric vehicle market
 Risks

Four product lines, trying to
do too much, versus Ford
with only 2

Slower growth than
anticipated, no dividends

Low margins

Lingering effects of
government bailout and
bankruptcy filing versus Ford

Questionable product
development
COH – Coach Inc.

Buy 400 basis points
Current Price $68.31
Business Overview
 Designs and markets accessories and gifts for men and women
 Handbags, cases, footwear, wearables, jewelry, etc.
 Retail stores in North America, Japan, Hong Kong, Macau,
mainland China
 Internet and catalogs
 Wholesale customers, distributors
1-yr Performance
Versus S&P 500

Valuation Analysis
Relative to Industry
High
Low
Median
Current
P/Trailing E
3.5
0.88
1.4
1.0
P/Forward E
2.8
0.86
1.2
0.94
P/B
8.9
1.8
3.1
1.8
P/S
8.7
1.9
4.1
2.2
P/CF
4.4
Relative to Sector High
P/Trailing E
1.9
P/Forward E
1.7
P/B
8.2
P/S
10.6
P/CF
5.0
Relative to S&P 500 High
P/Trailing E
2.2
P/Forward E
1.9
P/B
5.9
P/S
6.4
P/CF
4.2
0.9
Low
0.2
0.3
2.0
3.6
1.0
Low
0.59
0.68
2.0
2.0
0.7
1.6
Median
1.3
1.2
3.8
5.6
2.4
Median
1.6
1.4
3.9
3.7
2.2
1.1
Current
1.2
1.1
2.5
4.0
1.8
Current
1.5
1.3
3.7
3.5
2.0
Valuation Analysis
Absolute Valuation High
Low
Median
Target E, Target
Target
Price
Current
S, B,
Multiple
etc/Share
(F x G)
P/Forward E
34.6
7.9
20.6
17
19.5
4.14
$ 80.73
P/S
9.9
1.5
4.8
4.2
4.5
18
$ 81.00
P/B
18.7
3.1
10.3
8
9
8.5
$ 76.50
P/EBITDA
29.43
3.83
15.07
12.62
13.5
6
$ 81.00
P/CF
45.6
6
20.9
18
19.5
4
$ 78.00
Target Price
Method
P/Forward E
P/S
P/B
P/EBITDA
P/CF
Target Price
Target
$80.73
$81.00
$76.50
$81.00
$78.00
 Target Price $79.45
 Current Price $67.49
 Margin of Safety $11.96, 17%
Weight
0.2
0.2
0.2
0.2
0.2
Target * W
$16.15
$16.20
$15.30
$16.20
$15.60
$79.45
Comparison to Industry
Market Cap
COH
Industry
19.64 B
567.03 B
Qtrly Rev Growth (YoY) 16.60%
9.20%
Gross Margin
72.60%
39%
Operating Margin
31.74%
7.75%
Profit Margin
21.34%
12.44%
P/E (ttm)
20.3
19.6
PEG (% year expected)
1.2
1.2
 Comments
Risks and Opportunities
 Catalysts

 Risks
Economy picking up

Economy remains as is
 Increase in disposable

Changing consumer tastes

Falling margins
income
 Increasing employment
 Increase in commodity

Increasing market share

Strong growth

Strong competition

International expansion

Geopolitical risk

Consumer shift to
affordable luxury
costs
F – Ford Motor Co.

Buy 229 basis points
Current Price $10.42
Business Overview
 Major auto manufacturer
 Develops, manufactures, distributes, services vehicles and parts
 Two sectors: automotive and financial services
 Retail dealers, distributors, fleet customers, after-sale services
via service plans
 Retail financing, direct financing leases, wholesale financing,
insurance services
 2 product lines
 Ford and Lincoln
1-yr Performance
Versus S&P 500

Valuation Analysis
Relative to Industry High
P/Trailing E
1.5
P/Forward E
1.1
P/B
0.9
P/S
1.9
P/CF
2.0
Relative to Sector High
P/Trailing E
3.4
P/Forward E
1.0
P/B
7.7
P/S
0.4
P/CF
0.6
Relative to S&P 500
High
Low
1.0
0.89
0.3
0.9
0.2
Low
0.3
0.4
0.5
0.1
0.1
Low
Median
1.1
1.0
0.4
1.0
1.0
Median
0.4
0.5
1.0
0.3
0.4
Median
Current
1.1
0.97
0.9
1.0
1.1
Current
0.4
0.4
0.8
0.3
0.3
Current
P/Trailing E
4.1
0.41
0.49
0.47
P/Forward E
1.1
0.43
0.56
0.52
P/B
10.1
0.5
1.2
1.2
P/S
0.3
0.0
0.2
0.2
P/CF
0.6
0.0
0.3
0.4
Valuation Analysis
Absolute Valuation High
Low
Median
Target E, Target Price
Target
Current
S, B,
Multiple
etc/Share
(F x G)
P/Forward E
15.8
5.6
7.8
6.9
7.4
1.54
$11.40
P/S
0.4
0.0
0.2
0.3
0.4
37.00
$14.80
P/B
24.3
0.9
2.7
2.5
2.7
4.50
$12.15
P/EBITDA
7.84
0.37
2.83
3.50
3.60
3.25
$11.70
P/CF
4.9
0.3
2.9
3.4
3.0
4.00
$12.00
Target Price
Method
P/Forward E
P/S
P/B
P/EBITDA
P/CF
Target Price
Target
$11.40
$14.80
$12.15
$11.70
$12.00
 Target Price $12.41
 Current Price $10.42
 Margin of Safety $1.99, 19%
Weight
0.2
0.2
0.2
0.2
0.2
Target * W
$2.28
$2.96
$2.43
$2.34
$2.40
$12.41
??Valuation Analysis - MCD
Absolute Valuation High
Low
Median
Target E, Target Price
Target
Current
S, B,
Multiple
etc/Share
(F x G)
P/Forward E
19.5
13.4
15.9
15.8
15.9
6
$95.40
P/S
4.0
2.5
3.1
3.4
3.5
27.15
$95.03
P/B
7.3
3.7
4.9
6.5
6.5
14.1
$91.65
P/EBITDA
14.13
7.65
10.21
9.41
10
10.25
$102.50
P/CF
17.6
11.2
13.8
13.6
13.7
7
$95.90
??Target Price - MCD
Method
P/Forward E
P/S
P/B
P/EBITDA
P/CF
Target Price
Target
$95.40
$95.03
$91.65
$102.50
$95.90
 Target Price $96.10
 Current Price $90.88
 Margin of Safety $5.22, 5.7%
Weight
0.2
0.2
0.2
0.2
0.2
Target * W
$19.08
$19.01
$18.33
$20.50
$19.18
$96.10
Peer Analysis
GM
F - Ford
TM - Toyota HMC - Honda
Market Cap
34.09 B
39.80 B
126.88 B
60.81 B
Gross Margin
17.6%
15.9%
17.3%
32.2%
Operating Margin 4.7%
6.9%
1.0%
2.9%
Profit Margin
4.0%
4.8%
1.2%
2.6%
P/E (ttm)
6.55
2.21
70.79
22.91
ROE
22.9
67.9
2.0
4.8
 Comments
Risks and Opportunities
 Catalysts

Sales of Focus model

Domestic market and
international market
presence
 Risks

Massive investment in
China, $5B, launch 15
models by 2015. If Ford
sales hurt Chinese
domestic market enough,
government could step up
regulations
JAH – Jarden Corp.

Do not buy
Current Price $41.53
Business Overview
 Manufactures, sources, and sells consumer products worldwide
 Outdoor Solutions – consumer lifestyle products
 Consumer Solutions
 Branded Consumables – household staples
 Sells products through:
 Club, craft, department, drug, and home improvement stores
 Direct-to-consumer channels
 Retailers
 Mass merchandisers
 Online
 Wholesalers
1-yr Performance
Versus S&P 500

Valuation Analysis
Relative to Industry
P/Trailing E
P/Forward E
P/B
P/S
P/CF
Relative to Sector
P/Trailing E
P/Forward E
P/B
P/S
P/CF
High
1.0
0.99
1.1
0.6
1.1
High
0.8
0.8
0.9
0.8
0.3
Low
0.49
0.42
0.4
0.3
0.4
Low
0.1
0.1
0.4
0.3
0.4
Median
0.74
0.72
0.7
0.5
0.8
Median
0.6
0.6
0.6
0.5
0.8
Current
0.76
0.95
0.8
0.5
1.0
Current
0.7
0.6
0.6
0.5
0.8
Relative to S&P 500
High
Low
Median
Current
P/Trailing E
1.1
0.32
0.73
0.87
P/Forward E
1.0
0.36
0.69
0.73
P/B
0.9
0.4
0.7
0.9
P/S
0.5
0.2
0.4
0.4
P/CF
1.2
0.3
0.7
0.8
Valuation Analysis
Absolute Valuation High
Low
Median
Target E, Target Price
Target
Current
S, B,
Multiple
etc/Share
(F x G)
P/Forward E
15.8
4.2
9.7
9.7
9.7
4.07
39.5
P/S
0.8
0.1
0.5
0.5
0.5
87.5
43.75
P/B
2.4
0.6
1.5
1.9
1.5
2.5
37.5
P/EBITDA
8.18
2.90
5.15
4.26
5.15
9.3
38.6
P/CF
13.1
2.3
6.7
7.6
6.7
6
40.2
Target Price
Method
DCF
P/S
P/E
P/EBITDA
P/CF
Target Price
Target
$45.08
$43.75
$39.50
$38.60
$40.20
 Target Price $43.71
 Current Price $41.13
 Margin of Safety $2.58, 6%
Weight
0.7
0.08
0.08
0.08
0.08
Target * W
$31.56
$3.28
$2.96
$2.90
$3.02
$43.71
Peer Analysis
JAH
CLX
NWL
HELE
3.27 B
8.98 B
5.28 B
1.06 B
Operating Margin 9.38%
16.58%
12.52%
9.34%
Profit Margin
3.30%
9.91%
2.17%
11.80%
P/E (ttm)
16.29
17.14
42.42
9.57
ROE
0.35
2.40
0.32
N/A
Market Cap
Gross Margin
 Comments
Risks and Opportunities
 Catalysts

New product innovation

Economies of scale

Organic products
 Risks

Uncertainty in global
economy