Nomura Securities Retail Weekend Reading: Sanity Check - Framing Stocks Using Enterprise Values
Tweet Send to a FriendGet Alerts TJX Hot Sheet
Price: $49.84 -1.37%
Rating Summary:
13 Buy, 9 Hold, 0 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 12 | Down: 19 | New: 22
Rating Summary:
13 Buy, 9 Hold, 0 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 12 | Down: 19 | New: 22
Trade TJX Now!
Nomura Securities Retail Weekend Reading: Sanity Check - Framing Stocks Using
Enterprise Values
Analysts, Paul Lejuez and Aram Rubinson, said, "The market correctly focuses on key metrics such as P/E and EBITDA multiples, ROIC, and free cash flow. While these are important metrics to consider in making investment decisions, we also believe it is a good sanity check to simply look at enterprise value (EV). We believe that our simple EV sanity check, combined with more traditional valuation and operating metrics, can help better frame investment decisions. For the same price of TJX Cos (NYSE: TJX) (EV of $32.5BN), we would rather own Limited (NYSE: LTD) and Coach (NYSE: COH), which combined has higher EBITDA, FCF, and sq ft growth. Lululemon (Nasdaq: LULU) and Michael Kors (Nasdaq: KORS) have roughly the same EV and trade at similar multiples. We prefer KORS, as we believe it can grow faster thanks to accessories being more portable than apparel. Amazon's (Nasdaq: AMZN) EV is the largest in our coverage and 6% higher than HD’s. At the writing of this report, Tractor Supply (Nasdaq: TSCO) and Advanced Auto (NYSE: AAP) had EVs within 5% of each other. In our view, the two could well be earning identical earnings as soon as 2014, but TSCO has a runway for seven-plus years of 8% unit growth vs. ~3% for AAP. Bed Bath & Beyond (Nasdaq: BBBY) and Dollar Tree (Nasdaq: DLTR) are two of the best merchants we cover. Both execute unique formats and fetch similar EVs of $12-13B."
Join StreetInsider.com FREE and get immediately alerted when news breaks on your stocks and other market items - JOIN NOW
*NEW - Download StreetInsider's FREE iPhone and iPad App - Click Here
Enterprise Values
Analysts, Paul Lejuez and Aram Rubinson, said, "The market correctly focuses on key metrics such as P/E and EBITDA multiples, ROIC, and free cash flow. While these are important metrics to consider in making investment decisions, we also believe it is a good sanity check to simply look at enterprise value (EV). We believe that our simple EV sanity check, combined with more traditional valuation and operating metrics, can help better frame investment decisions. For the same price of TJX Cos (NYSE: TJX) (EV of $32.5BN), we would rather own Limited (NYSE: LTD) and Coach (NYSE: COH), which combined has higher EBITDA, FCF, and sq ft growth. Lululemon (Nasdaq: LULU) and Michael Kors (Nasdaq: KORS) have roughly the same EV and trade at similar multiples. We prefer KORS, as we believe it can grow faster thanks to accessories being more portable than apparel. Amazon's (Nasdaq: AMZN) EV is the largest in our coverage and 6% higher than HD’s. At the writing of this report, Tractor Supply (Nasdaq: TSCO) and Advanced Auto (NYSE: AAP) had EVs within 5% of each other. In our view, the two could well be earning identical earnings as soon as 2014, but TSCO has a runway for seven-plus years of 8% unit growth vs. ~3% for AAP. Bed Bath & Beyond (Nasdaq: BBBY) and Dollar Tree (Nasdaq: DLTR) are two of the best merchants we cover. Both execute unique formats and fetch similar EVs of $12-13B."
Join StreetInsider.com FREE and get immediately alerted when news breaks on your stocks and other market items - JOIN NOW
*NEW - Download StreetInsider's FREE iPhone and iPad App - Click Here
You May Also Be Interested In
- Morgan Stanley Maintains Bullish Stance on Walter Energy (WLT)
- Wells Fargo Starts CorEnergy Infrastructure Trust (CORR) at Outperform
- Men's Wearhouse (MW) Founder George Zimmer Axed, Reports Say he Had Trouble 'Letting Go'
Create E-mail Alert Related Categories
Analyst Comments, Retail SalesRelated Entities
Nomura, Earnings
Login with Facebook
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
