Ethan Allen Interiors (ETH)
RECOMMENDATION:
BUY
Background
•
Ethan Allen Inc. is a leading manufacturer and retailer of quality home furnishings,
offering a full range of furniture products and accessories. Ethan Allen manufactures
and distributes three principal product lines:
• case goods (wood furnishings), consisting primarily of bedroom and dining
room furniture, wall units and tables
• upholstered products, consisting primarily of sofas, loveseats, chairs,
and recliners
• home accessories, and other, including carpeting and area rugs, lighting
products, clocks, wall decor, bedding ensembles, draperies, decorative
accessories and indoor\outdoor furnishings.
•
The Company's operations are classified into two main businesses: wholesale and
retail home furnishings. The wholesale home furnishings business is principally
involved in the manufacture, sale and distribution of home furnishing
products to a network of independently-owned and Ethan Allen-owned stores. The
retail business exclusively sells Ethan Allen's products though a network of 309 retail
stores (73 owned and operated by ETH, 215 independent retailers, 21 stores abroad).
Ethan Allen is one of the ten largest manufacturers of household furniture in the
United States. Ethan Allen manufactures and/or assembles approximately
90% of its products at 21 manufacturing facilities which includes 3 saw mills,
thereby maintaining control over cost, quality and service to its consumers.
Ethan Allen distributes its products primarily through eight regional distribution centers
and terminals strategically located throughout the United States.
Background
Revenue Generation
Case Goods
Upholstered Products
Home Accessories
1999
57%
28%
15%
100%
1998
58%
28%
14%
100%
1997
58%
30%
12%
100%
•
Ethan Allen's policy is to sell its products at the same delivered cost to all
dealers nationwide, regardless of their shipping point. The adoption of this
policy has discouraged dealers from carrying significant inventory in their
own warehouses. As a result, Ethan Allen obtains accurate information regarding
sales to dealers to better plan production runs and manage inventory. Having one
national landed cost has permitted Ethan Allen to provide one national
suggested retail price which, in turn, helps facilitate a national advertising
program. Ethan Allen television advertising is aired approximately 27 weeks per year.
•
Ethan Allen's product strategy has been to expand its home furnishings collections to
appeal to a broader consumer base while providing good quality and value.
Management believes that the two most important style categories in home furnishings
today are Classic (style which includes English 18th Century and 19th Century
Neo-Classic styling) and Casual (style is based on classic contemporary design
elements). Each collection includes case goods, upholstered products and
accessories, each styled with distinct design characteristics. Ethan Allen's store
concept allows for the display of these categories in complete room
settings which utilize the related collections to project the category lifestyle.
Background
Important Holdings
All Directors except CEO
Farooq Kathwari (CEO)
0.5%
11.2%
Number of Institutions
213
Percent of total
77%
Institutional Holdings
% SHO
% Chg
American Express Financial
7.4%
56.0%
Thomson Horstmann
4.2%
-1.0%
Maverick Capital
3.5%
-8.0%
Commerce Bank MO
3.5%
25.0%
Fred Alger Mgmt.
2.5%
43.0%
Purchases
Sales
Net
5,295,840
(3,636,862)
1,658,978
13%
-9%
4%
Honors / Management
•
Furniture Today (a leading industry publication) published a survey of America's Top 100
Furniture Retailers for 1999. Ethan Allen was ranked No. 2 in terms of furniture,
beddings and accessary sales for dealer-owned and company-owned stores and
was ranked No. 1 as the largest single-source store network for home furnishings in
the country.
•
Worth Magazine named ETH CEO Farooq Kathwari in the top 50 for successfully
reinventing the Ethan Allen Brand. In the past 7 years, he has introduced furninture with
a more casual, classic style, cut prices, designed new customer friendly stores and
launched a $67.5M national advertising campaign in 1998
What’s up ? (Firm)
•
First quarter sales and EPS increased 14.1% and 18.4% respectively. EPS(Q) at 0.45 was
a 4.65% surprise. This is the 17th consecutive quarter ETH has been able to report
significant growth in sales and earnings.
•
Approximately 90% of the Company's products have been redesigned over the last
six years. This allows the Company to maintain focused lines within each style category
which enhances efficiencies. In 1992, Ethan Allen instituted a new image and logo
program. Additionally, Ethan Allen undertook a program to renovate the exterior of its
stores. As of June 30, 1999, this renovation program has been substantially
completed with 297 or 96% of all stores (including dealer-owned and Ethan
Allen-owned stores) having either implemented new exteriors or are currently under
renovation. The store is divided into three-stores-in-one and positions Ethan Allen
as specialists in casual styles, classic designs and decorative accessory
retailing. It features two fully designed show homes to inspire consumers and show
them how product could look in their homes. In addition, it presents products in
focused vignettes that are easy and relatively inexpensive to update each season.
In the last six years 130 new stores were opened, many of them relocations. Sales to
independent dealer-owned stores accounted for approximately 60% of total net sales
of the Company in fiscal 1999. In fiscal year 1999, the Company's focus was on
introducing the Avenue and Ethan Allen Kids lines of home furnishings. These
products have recently been introduced at the retail level and revenues to date have
not been significant. Also, in fiscal year 1999, the Company initiated its
Internet distribution strategy, which is expected to be launched in the second
quarter of fiscal year 2000.
•
“We’re expanding our reach, our relationship…There’s no reason not to help decorate the
client’s children’s room and garden.” (CEO)
What’s up ? (Industry 1/2)
•
BAC (10/04): Home furnishings is $125 billion industry (accounting for 2.2% of total
annual consumer spending). Consumers spend an average of $1,215 per household per
year on home furnishings of which 46% of that figure on furniture. According to BAC the
industry is not as volatile as investors think with only three years of declining growth
since 1970. Three areas besides furniture are housewares, accessories and textiles that
are growing at a faster rate. Sector has been holding share better than most other
product sectors. Growth for home furnishings segment has a rate of 8% since 1970
•
BAC enumerated four ``growth drivers'' for the home furnishings industry:
 Favorable Demographics -- 35-54-year-olds represent 52% of home
furnishings purchases and this age group is estimated to increase 33% to 46
million people by 2010.
 Home Ownership - home ownership is at record levels in the U.S., up 67%
since 1970. And, homes are larger these days, requires more furnishing.
 Influence of Media - a dramatic increase in home magazine readership (up
13% since 1995) illustrates a growing consumer interest. Home furnishings
television programming has also gained enthusiasts.
 Renovations are at an all-time high, having totaled $164 billion in 1998. In the
last seven years, home renovation spending has increased 74%. Increase in
renovation has come about particularly as more Americans begin to work from
home offices. Last year, 3.6 million Americans were paid to work at home 89% more than in 1991.
What’s up ? (Industry 2/2)
•
Finally, Hale (BAC) outlined some of the trends that will continue to characterize the
home furnishings industry, including: the polarization of spending; a focus on value at
the low-end; increased dominance of brands at the high-end; new retail concepts from
national players; and ``do-it-for-me'' one-stop redecorating resources offered by
companies like The Home Depot and Sears.
•
AG Edwards (10/04): believes that the broad economic environment has been quite
conductive to solid growth and profitability in the home furnishings arena…we expect
those trends to continue…at a somewhat slower more sustainable pace over the next
year or two. Virtually all of the economic variables necessary to drive growth in this
segment are positive – house activity, interest rates, consumer confidence, employment
levels and demographic trends such as the middle aging of the baby boomers
•
Brand names (including Ethan Allen as one of five mentioned) are key to expansion in
the retail industry.
ETHAN ALLEN INTERIORS INC
Balance Sheet
Period End: Jun 30, 1999
Date Filed: Sep 22, 1999
Dun & Bradstreet
06/30/98
ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable
Notes receivable
Inventories
Prepaid expenses and other current assets
Deferred income taxes
Total current assets
Property, plant and equipment, net
Property held for sale
Notes receivable
Intangibles, net
Deferred financing costs, net of amortization
Other assets
Total assets
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt and
Accounts payable
Accrued expenses
Accrued compensation and benefits
Total current liabilities
Long-term debt, less current maturities
Obligations under capital leases, less current
Other long-term liabilities
Deferred income taxes
Total liabilities
Commitments and contingencies
Shareholders' equity:
Class A common stock, par value $.01,
Preferred stock, par value $.01, 1,055,000
Additional paid-in capital
Less:
Treasury stock (at cost) 3,745,928 shares at
June 30, 1998
Retained earnings
Total shareholders' equity
Total liabilities and shareholders' equity
RMA
Wood
Furniture Furniture Household
Home
Stores
Furn(upholstered)
06/30/99
$19,380
$8,968
35,640
34,302
686
640
114,364 144,045
10,735
14,088
7,094
7,783
$187,899 $209,826
188,171 214,492
1,129
484
1,790
1,407
50,773
51,598
632
444
2,729
2,371
$433,123 $480,622
4.5%
8.2%
0.2%
26.4%
2.5%
1.6%
43.4%
43.4%
0.3%
0.4%
11.7%
0.1%
0.6%
100.0%
1.9%
7.1%
0.1%
30.0%
2.9%
1.6%
43.7%
44.6%
0.1%
0.3%
10.7%
0.1%
0.5%
100.0%
14.2%
20.4%
60.0%
39.1%
12.7%
18.5%
80.0%
44.4%
5.1%
24.1%
78.1%
17.0%
80.3%
15.0%
62.0%
$879
$757
51,135
59,378
5,863
9,174
15,735
16,937
73,612
86,246
11,480
9,611
1,016
308
812
1,370
31,883
32,552
$118,803 $130,087
---
0.2%
11.8%
1.4%
3.6%
17.0%
2.7%
0.2%
0.2%
7.4%
27.4%
0.2%
12.4%
1.9%
3.5%
17.9%
2.0%
0.1%
0.3%
6.8%
27.1%
30.0%
15.1%
30.0%
12.3%
16.4%
35.0%
11.5%
31.6%
11.1%
12.8%
35.6%
37.8%
48.5%
445
-262,313
262,758
447
-267,286
267,733
0.1%
0.1%
60.6%
60.7%
55.6%
55.7%
(33,750) (78,887)
229,008 188,846
85,312 161,689
314,320 350,535
$433,123 $480,622
-16.4%
39.3%
33.6%
72.9%
100.0%
-7.8%
52.9%
19.7%
72.6%
100.0%
29.3%
Balance
Sheet
BV per sh
•1999: 8.58
•1998: 7.28
•1997: 6.05
•1996: 5.15
•1995: 4.49
1999
Operating activities:
Net income
Adjustments to reconcile net income to net cash
Depreciation and amortization
Compensation expense related to restricted stock
Provision for deferred income taxes
Extraordinary charge
Other non-cash benefit
Change in assets and liabilities:
Accounts receivable
Inventories
Prepaid and other current assets
Other assets
Accounts payable
Accrued expenses
Other long-term liabilities
Net cash provided by operating activities
Investing activities:
Proceeds from the disposal of property, plant, and
Proceeds from the disposal of property held for sale
Capital expenditures
Acquisition of businesses
Payments received on long-term notes receivable
Disbursements made for long-term notes receivable
Redemption of short term securities
Investments in short term securities
Net cash used in investing activities
Financing activities:
Borrowings on revolving credit facilities
Payments on revolving credit facilities
Redemption of Senior Notes
Premium paid on Senior Note redemption
Other payments on long-term debt and capital
Other borrowings on long-term debt
Payments to acquire treasury stock
Net proceeds from issuance of common stock
Increase in deferred financing costs
Dividends paid
Net cash used in financing activities
Net (decrease)/increase in cash and cash
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
1998
1997
$81,288 $71,146 $48,740
16,344
1,819
(20)
-251
15,868
2,136
683
802
77
16,411
891
575
-498
1,222
(25,040)
(3,353)
(1,065)
10,652
4,023
558
86,680
(3,340)
(6,839)
(4,011)
(891)
11,576
414
(3)
87,618
1,822
2,726
653
137
5,099
973
(221)
78,304
1,721
827
110
--1,945
(40,628) (29,665) (23,383)
(7,164)
--799
1,538
1,152
(255)
(302) (1,077)
-30,270
--(12,295) (17,975)
(45,527) (9,627) (39,228)
81,500
(81,500)
--(2,717)
18
(45,137)
747
(55)
(4,421)
(51,565)
(10,412)
19,380
$8,968
-14,500
-(21,500)
(52,543) (9,457)
(461)
-(2,079) (2,134)
111
794
(23,310) (7,249)
1,255
1,235
-(173)
(3,450) (2,304)
(80,477) (26,288)
(2,486) 12,788
21,866
9,078
$19,380 $21,866
Cash Flow
Statement
Capital expenditures have
increased due to new store
openings and expanding
manufacturing capacity.
Financing flows include buying
back of stock (due to stock
options given to management)
so that earnings are not diluted.
Income Statement
ETHAN ALLEN INTERIORS INC
Income Statement
Period End: Jun 30, 1999
Net sales
Cost of sales
Gross profit
Operating expenses:
Selling
General and administrative
Operating income
Interest and other miscellaneous income, net
Interest and other related financing costs:
Interest expense
Amortization of deferred financing costs
Total interest and other related financing costs
Income before income taxes and extraordinary
Income tax expense
Income before extraordinary charge
Extraordinary charge from early retirement of
Net income
EPS before extraordinary charge
Extraordinary charge
EPS per basic share
EPS diluted before extraordinary charge
Extraordinary charge
EPS per diluted share
Dividends declared per common share
6/30/97
6/30/98
6/30/99
$571,838 $679,321 $762,233
323,600 363,746 407,234
248,238 315,575 354,999
1997
1998
1999 Average RMA
100.00% 100.00% 100.00% 100.00%
56.59%
53.55%
53.43%
54.52%
43.41%
46.45%
46.57%
45.48% 22%
85,927
76,462
85,849
1,272
110,240
85,645
119,690
3,449
123,742
98,365
132,892
1,707
15.03%
13.37%
15.01%
0.22%
16.23%
12.61%
17.62%
0.51%
16.23%
12.90%
17.43%
0.22%
15.83%
12.96%
16.69%
0.32%
(5,864)
563
6,427
80,694
31,954
48,740
-$48,740
$1.13
-$1.13
$1.11
-$1.11
$0.07
(4,245)
364
4,609
118,530
46,582
71,948
802
$71,146
$1.67
(0.02)
$1.65
$1.63
(0.02)
$1.61
$0.09
(1,639)
243
1,882
132,717
51,429
81,288
-$81,288
$1.97
-$1.97
$1.92
-$1.92
$0.12
-1.03%
0.10%
1.12%
14.11%
39.60%
8.52%
-0.62%
0.05%
0.68%
17.45%
39.30%
10.59%
-0.22%
0.03%
0.25%
17.41%
38.75%
10.66%
-0.62%
0.06%
0.68%
16.32%
39.22%
9.93%
8.52%
10.47%
10.66%
9.89%
•
Fantastic Margins !!!!
•
Margins that are greater than any competitor’s and the industry’s
5%
5%
Growth/Assumptions for model
Revenue - Quarterly
Results
FY (6/99)
FY (6/98)
FY (6/97)
Revenue - Growth
FY (6/99)
FY (6/98)
EPS - Quarterly
Results
FY (6/99)
FY (6/98)
FY (6/97)
EPS - Growth
FY (6/99)
FY (6/98)
Expected EPS Gwth
Rates
Money Central
Robertson
Stephens(10/1)
Raymond James (08/06)
First Union Cap (07/01)
First Call
Average
5yr Annual Growth Rate
Revenue
NI
1st Qtr
2nd Qtr 3rd Qtr 4th Qtr
166.2
193.7
194.6
207.7
152.5
172.7
171.4
182.6
132.4
138.3
144.7
156.4
1st Qtr
2nd Qtr 3rd Qtr 4th Qtr
9.0%
12.2%
13.5%
13.7%
15.2%
24.9%
18.5%
16.8%
1st Qtr
2nd Qtr 3rd Qtr 4th Qtr
0.38
0.5
0.5
0.54
0.32
0.43
0.41
0.47
0.2
0.28
0.29
0.34
1st Qtr
2nd Qtr 3rd Qtr 4th Qtr
18.8%
16.3%
22.0%
14.9%
60.0%
53.6%
41.4%
38.2%
Next
FY2000 FY2001 5yrs
00 P/E
13.00% 14.00% 17.20%
13.8
15.00%
15.00%
15.00%
12.00%
15.00%
12.00%
12.00%
13.75%
13.67%
15.00%
14.73%
0.12
0.35
762.2
679.2
571.8
12.2%
18.8%
1.92
1.63
1.11
17.8%
46.8%
Proforma Income Statement
7%
6/30/00
$815,589
$444,663
$370,926
12%
6/30/01
$872,681
$475,790
$396,891
6/30/02
$933,768
$509,095
$424,673
6/30/00
$853,701
$465,442
$388,259
14.73%
6/30/01
6/30/02
6/30/00
6/30/01
6/30/02
$956,145 $1,070,882 $874,510 $1,003,325 ########
$521,295 $583,850 $476,787 $547,018 $627,593
$434,850 $487,032 $397,723 $456,308 $523,522
$129,104 $138,141 $147,811 $135,137
$105,710 $113,110 $121,027 $110,650
$136,112 $145,640 $155,835 $142,473
$2,594
$151,353
$123,928
$159,569
$169,516 $138,431
$138,799 $113,347
$178,718 $145,945
$158,822 $182,216
$130,043 $149,198
$167,443 $192,107
(1,639)
(1,639)
(1,639)
(1,639)
243
243
243
243
1,882
1,882
1,882
1,882
$134,942 $141,876 $152,071 $138,709
$52,920 $55,639 $59,637 $54,397
$82,022 $86,237 $92,434 $84,312
(1,639)
243
1,882
$155,805
$61,101
$94,704
(1,639)
(1,639)
243
243
1,882
1,882
$174,954 $142,181
$68,611 $55,759
$106,343 $86,423
(1,639)
(1,639)
243
243
1,882
1,882
$163,679 $188,343
$64,189 $73,862
$99,490 $114,482
$82,022
$2.00
$86,237
$2.10
$92,434
$2.25
$84,312
$2.06
$94,704
$2.31
$106,343
$2.59
Estimates
•First Call: ‘00 2.17 ‘01 2.47
•Schwab:
‘00 2.17 ‘01 2.47
•Value Line: ‘00 2.20 ‘04 2.80
•Zacks: ‘00 mean 2.18 ‘01 mean 2.47
$86,423
$2.11
$99,490 $114,482
$2.43
$2.79
Stock Price Estimate
EPS
P/E high
P/E low
P/E mid average
P/E Industry
Stock Price (mid)
Stock Price (high)
Stock Price (low)
Stock Price (industry)
Average
Value Line
P/E high
P/E low
Mid
Scenario1
Scenario2
Scenario3
Average
Average P/E above
Industry
Stock Price
Stock Price (industry)
Analysts High
Analysts Low
Stock Price Analysts High
Stock Price Analysts Low
ROI 2002
Bought @ 31
Stock Price 2002 @ 46
Market rate @ 9%
Premium return over market
2000
$2.00
36.93
17.60
27.27
15.75
$54.55
$73.89
$35.21
$31.51
$48.79
1993
10.5
5.4
2001
$2.10
2002
$2.25
2000
$2.06
2001
$2.31
$57.35
$77.68
$37.02
$33.13
$51.30
1994
10.7
6.5
$61.47
$83.27
$39.68
$35.51
$54.98
1995
8.3
5.8
$56.07
$75.95
$36.19
$32.39
$50.15
1996
13
6.5
$62.98
$85.31
$40.65
$36.38
$56.33
1997
28.6
12.3
20.45
2002
$2.59
2000
$2.11
2001
$2.43
2002
$2.79
$70.72
$57.47
$66.16
$95.80
$77.85
$89.62
$45.65
$37.10
$42.71
$40.85
$33.20
$38.22
$63.25
$51.41
$59.18
1998 1999E
Average
44.4
37.8
36.93
15.8
24.7
17.6
30.1
31.25
27.27
$76.13
$103.13
$49.14
$43.98
$68.10
2.00
2.10
2.25
2.06
2.31
2.59
2.11
2.43
2.79
2.05
2.28
2.55
24.39
15.75
Average
Mid
Value Line 2002-2004
$ 50.11 $ 55.60 $ 62.11 $
55.94
46.04 High
50
$ 32.37 $ 35.91 $ 40.11 $
36.13
Low
35
2.21
2.58
Mid
42.5
2.11
2.38
53.90
62.92
58.41
46.88 First Union Cap
$50 target
33.23
37.49
35.36
Banc of America
$40 target
based on '99 '00 est
48.4%
29.5%
164.0%
DuPont Analysis
YEAR ROE
NI/Pretax Pretax/Sales Sales/Assets Assets/Equity ROA
1998 23.2%
61.3%
0.1741
1.59
1.37 16.9%
1997 22.7%
60.0%
0.1745
1.57
1.38 16.4%
1996 18.4%
60.4%
0.1411
1.34
1.61 11.4%
•
Profit Margin increasing
•
More sales generated from assets
•
Less leverage
Firm Ratios and Comparisons
La-Z-Boy Ethan Allen FurnBrandsInt. Haverty
Industry
P/E
14
15.7
9.17
15.78
15.75
P/Rev
0.77
1.62
0.5
0.61
1.4
P/Bk
2.4
3.52
2.14
1.64
3.2
P/E/Growth
0.47
1.2
1.16
1.20
1.47
1yr Rev Gr
15.1
12.2
7.89
13.11
10.69
5yr Rev Gr
9.42
11.96
14.86
10.85
13.8
1yr Earnings Gr
30.1
13.1
46.26
57.76
15.11
5yr Earnings Gr
14.2
35.33
34.4
9.68
19.33
Gross Margin
26.72
46.57
28.35
47.21
34.1
Oper Mar
8.7
17.4
9.84
6.22
12.86
Profit Mar
5.1
10.7
5.42
3.91
8.12
Curr Ratio
3.2
2.4
3.98
3.8
2.08
Debt/Equity
0.15
0.03
1.2
0.86
0.55
ROA
11.74
17.65
8.46
5.88
10.14
ROE
17.98
23.2
26.73
14.35
20.96
Mrkt Val
992
1229
974.5
272
Revenue
1340.40
762.20
1960.00
441.88
NI
71.51
81.00
98.00
17.33
EPS
1.37
1.92
1.82
0.99
Firm Ratios and Comparisons
F B N Qu a t e r l y
ET H Qu a t e r l y
0. 6
0. 6
0. 5
0. 5
0. 4
0. 4
0. 3
0. 3
0. 2
0. 2
0. 1
0. 1
0
0
M ar ch
Jun
Sep
Dec
M ar ch
Jun
Sep
Dec
ETH Annual EPS
FBN Annual EPS
2.5
0
19
90
-0.5
-1
-1.5
19
99
0
19
98
0.5
19
97
0.5
19
96
1
19
95
1
19
94
1.5
19
93
1.5
19
92
2
19
91
2
1994
1995
1996
1997
1998
1999
Firm Ratios and Comparisons
Ethan Allen
P/E
P/Rev
P/Bk
P/E/Grow
1yr Rev
5yr Rev
1yr
5yr
Gross
Oper Mar
Profit Mar
Curr Ratio
Debt/Equi
ROA
ROE
Mrkt Val
Revenue
NI
EPS
Rec
Inventory
Asset
15.7
1.62
3.52
1.2
12.2
11.96
13.1
35.33
46.57
17.4
10.7
2.4
0.03
17.65
23.2
1229
762.20
81.00
1.92
22.25
3.09
1.66
FurnBrandsInt
9.17
0.5
2.14
1.16
7.89
14.86
46.26
34.4
28.35
9.84
5.42
3.98
1.2
8.46
26.73
974.5
1960.00
98.00
1.82
6.02
4.84
1.56
Ethan
Industry
15.7
15.75
1.62
1.4
3.52
3.2
1.2
1.47
12.2
10.69
11.96
13.8
13.1
15.11
35.33
19.33
46.57
34.1
17.4
12.86
10.7
8.12
2.4
2.08
0.03
0.55
17.65
10.14
23.2
20.96
22.25
3.09
1.66
7.52
8.5
1.31
MED
Home Furn Furn Stores
3.1
2.4
72.2
7.3
14.7
3.1
2.8
61.7
5.9
10.7
Why ETH? (as opposed to FBN)
• Significantly better margins
• Vertically integrated company taking
advantage of cost savings and
advantageous margins. Also lower risk.
• Initiation of Internet presence
• Proven management
Determining the Value of ETH
based on Free Cash Flow
NI
Depre
Cap Exp
WCCF
FCF
WACC
PVFCF
TV
PV TV
g
Value
Share Price
$84,311.88
$16,000.00
$50,000.00
$20,000.00
$30,311.88
22.63%
$24,717.74
$4,089,220.05
$2,217,318.55
21.79%
$2,297,484.62
$54.70
$94,703.85 $106,342.86
$16,000.00 $16,000.00
$50,000.00 $50,000.00
$20,000.00 $20,000.00
$40,703.85 $52,342.86
$27,066.20
$28,382.13
•
FCF = NI+Depreciation-Capital Exp-WCCF
•
TV = FCF3 * (1+g) / (WACC - g)
•
Value = PVFCF (=FCF/1+WACC) + PV TV
•
Share Price = Value / 42M
Summary
•
Increase in EPS since 1991 (17 consecutive quarters
with significant increase in sales and eps)
•
Overall performing better than industry and peers
with higher profit margins
•
Proven management that has revived the firm
•
Firm is adaptive to current market trends and takes
advantage of them
•
Attractive stock price (P/E to EPS growth ~ 1.2, broke
through 50,100,150 moving day average, below P/E
high of 27 with current P/E at 17)
•
Future looks stable with growth potential and
sustainability in the long term
RECOMMENDATION:
BUY