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Blind Evaluation #3


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Looks like a very disciplined business. 



• Long term debt paid off

• Buying in shares

• No defined benefit pension plan

• Steady gross & net profit margin

• Steady increase in Sales/share & EPS


Would like to see the cash flow statement.




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My thoughts:


1) nice increasing earnings at a good clip, only one drop in 2008 area.  However, earnings growth is expected to be significantly less going forward, so I'll take that seriously for valuation purposes.


2) no debt--yay


3) had a period where it didn't have stores, but made money?  Not sure what does that.  Retail type net profit margins, most of money made at Christmas.


4) book value appears to be significant relative to earnings


5) Following from 4, ROTC/ROE are almost below my threshold for companies, so it would need to be fairly cheap for consideration


6) share count coming down, so buyback in place.  Hopefully buying at decent prices.



This one needs a lot more qualitative bonuses for consideration, and a good price.  I'd say <35 dollars for consideration and assume the market is around 45.

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Investors today cannot benefit from past financial performance of any investment. I am sure we cannot evaluate business/security by the past numbers alone. The future development counts in a big way!


      Exactly, I first liked the idea and have participated in Distressed Debt Investor's contest but it is hard tell what the future holds from just looking at past numbers. When attempting a valuation, most of the time you will be off. Also you do need to know the industry.

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