hi need your help
shuhuan123investments_final_fall_2014-michelle_liu_final_copy.xlsx
Assignment
Investment Management, Fin 3720 | ||||
Final exam | ||||
Agreement: By submitting the complete final exam to Bb I agree that I have not given any help to another student nor has another person given help to me. | ||||
Fall 2014 | ||||
1. Only open Blackboard and Excel on your computer. | ||||
2. Please save your file frequently on the computer's desktop. | ||||
3. Please use the cells to the right of the data to make calculations, | ||||
or you can add rows in the ss to make calculations. | ||||
4. Write your comments in the folder "Written comments". | ||||
5. When done rename the file to your ID number (no names) and post in Bb and email to [email protected] | ||||
Assignment | ||||
Welcome to Alpha Value Investors, LLC. We are pleased you have joined our investment firm, and hope that you appreciate our approach to investing. Almost all of our clients have well-diversified, efficient portfolios. Most have a "reasonably conservative" risk profile, but are also interested in having a non-core part of their portfolios invested in individual securities. | ||||
Unfortunately, Mike has been called to a meeting, but he would like your help on a recommendation to the investment committee. As a retail industry analyst, he is considering recommending one of two stocks to our clients next week. The firms are the Gap, Inc. (GPS) and Coach, Inc. (COH). | ||||
In this file are analyst reports and data on the firms. Please analyze these two companies and make a recommendation of one firm to our clients to be purchased as a long-term investment. The non-core, security portion of their portfolios are balanced across sectors but additional weight in the consumer cyclical sector would improve the allocation. | ||||
The investment committee meeting is in two hours and Mike will meet you out side the meeting room so please complete your analysis in this file and be prepared to share your findings with the committee and Mike. |
Written comments
Written comments: |
Note: Your are welcome to format this areas as you like to present the most compelling case for investing in one of the firms. |
Framework
B | A | |||||||||||||
Growth | 70% | 80% | ||||||||||||
Perf. Ratios | 70% | 60% | ||||||||||||
Mkt. Metrics | 90% | 70% | ||||||||||||
Cash flow | 70% | 65% | ||||||||||||
Value Creation | 70% | 95% |
Formulas
Formulas | ||
Sustainable growth rate | gs = ROE * b | |
Internal growth rate | gi = ROE * b * (E/A) | |
Free Cash Flow | Ebit * (1-t) + depreciation - change in NWC - CapEx | |
Dividend Discount Model (constant-growth) | P0 = (D1 / (ke - gss)) | |
Value with non-constant growth models | P0 = (Div1 / (1+ r)1) + (Div2 / (1+ r)2) + (Div3 / (1+ r)3) +(TV3 / (1+ r)3) | |
Where TV3 = (Div4 / (r - gss)) | ||
And, where Divn cnd be substituted for FCFn | ||
And, where ke is also called r | ||
And, where Terminal Value (TV) also called Horizontal Value | ||
Dividend Discount Model (no-growth) | P0 = Div1 / ke | |
Holding period return | Return = (D1 + (P1 - P0)) / P0 | |
CAPM | ke = rf + β (rm - rf), last element often referred to as "market premium" | |
WACC | WACC = ke (E / (E + D)) + kd (1 - t) (D / (E + D)), at market weights | |
Return on Invested Capital (ROIC) | (EBIT * (1-t)) / (Total assets - excess cash (if any) - non-interesting bearing current liabilities) | |
Note: There are many ways to calculate ROIC, this is just one simple one. | ||
Analyst Note COH
Coach is investing in its brand for the long term, although patience is needed in the short term. | |
by Paul Swinand Authors can be reached at Analyst Feedback Morningstar's Editorial Policies | |
Analyst Note | |
Coach's Fiscal 1Q Sales and Earnings Show Brand Relaunch On Track; Shares Still Below Fair Value | |
by Paul Swinand, 10/28/2014 | |
Morningstar | |
Investment Thesis 10/13/2014 | |
Coach has developed a narrow economic moat through a brand that enables pricing, sourcing and distribution advantages, and capital efficiency. Despite the company's recent struggles, it is still creating economic profits, and at a level greater than most retailers. | |
Attention to capital efficiency and consumers' strong brand loyalty have been key drivers of Coach's economic returns. We judge brand to be more important in bags and leather accessories than other softgoods categories as consumers tend to be more brand-loyal. Despite Coach's long-run plans to increase penetration in footwear and ready-to-wear, we believe accessories will remain the core of the business. The men's business also offers some upside; it currently constitutes around 14% of sales. | |
Coach's international business is still underdeveloped and represents an opportunity if growth there can continue for the long run. Although fiscal 2013 and 2014 struggles highlight Coach's market concentration in North America, using long-run success in Japan as a guide, we think there is plenty of room for Coach to take market share in other geographies. In Japan, Coach has had flat to low-single-digit growth for the past 10 years while competitors generally have experienced declines. The company entered Europe in 2012 through department store partnerships and is now penetrating further wholesale accounts and opening retail stores. We believe there is room for a brand such as Coach offering uniquely American styles and high-quality products at lower price points. In China, Coach lags other luxury brands with respect to sales, but has greater growth potential. The company increased its China business to more than $100 million in 2010 and approximately $550 million in fiscal 2014. Coach should also see higher operating margins in China as it expands because of lower operating costs and higher gross margins. In Europe, where Coach has just a small number of boutiques and is developing dedicated shops in department stores, the company should leverage selling, general, and administrative expenses over time and now projects $100 million in revenue in fiscal 2015. | |
Economic Moat 10/13/2014 | |
While Coach might not have complete pricing power because of the price/value equation inherent at some level in consumers' decision to purchase its midtier luxury offerings, the company's ability to design, distribute, and source has historically enabled it to produce high operating margins. Coach's gross margins (currently in the high 60s despite recent headwinds), and gross margin return on investment (taking inventory value and turns into account) are among the best in our coverage list, lending evidence that the firm has some pricing power in the range where it competes. Despite the short-term adverse fashion cycle, we believe the Coach brand to be valuable and believe the company will again be able to return to high operating margins, which should drive returns on capital back into the high 20s and even 30s. Thus, in our opinion, Coach's brand and premium pricing warrant a narrow economic moat. Brand history and the extensive, directly operated, and wholesale distribution network also contribute to the defensibility of the position, in our thinking, and although currently in a reinvestment phase, the revamping and refurbishment of the network only serve to reinforce the brand image and solidify the economic moat. Our viewpoint is supported by returns on capital that have averaged over 40% before fiscal 2013. Operating margins have averaged above 30% in the past, and despite short-term declines in fiscal 2014 and 2015, they can eventually reach the high 20s again, in our view. | |
Valuation 10/28/2014 | |
Our fair value estimate remains $45 per share, as we have incorporated fiscal first-quarter results and management's reiteration of full-year guidance for low-double-digit revenue declines and high teens operating margins. Our fair value estimate implies 18 times forward fiscal June 2015 year-ending earnings per share. On an enterprise value/EBITDA basis, our valuation implies 9 times fiscal June 2015 estimates, and on a cash flow yield basis, our fair value estimate suggests approximately 3.7% cash flow yield for fiscal 2015, at the low end of a five-year historical range of 4%-6%. Fiscal 2015 metrics include $55 million in one-time charges for store closings and restructuring. Our estimate for earnings per share in fiscal 2015 has not changed from $1.69 GAAP, and our adjusted earnings per share estimate is up by one penny to $1.82. For fiscal 2015 (year ended June), we project a revenue decline of 13.1% (unchanged), with mid-20s negative same-store sales growth implied in North America. Gross margins are now forecast to be below 68%, less than company guidance for around 70%. Although cost pressure worries have diminished, increased SG&A around the design changes should cause operating margins to dip below 18%, in line with the company's expectations of high-teens operating margin but more negative than our prior assumptions. We model roughly 100 basis points of additional gross margin decline, year over year, in fiscal 2015, as we remain concerned that some inventory clearing may still have to occur in the outlets and that fresh product from the new designer may face some reluctant consumer acceptance. In fiscal 2015, we model capital spending of $450 million. Over our 10-year explicit forecast period, we model operating margins first averaging 23.7% for the first five years going from under 18% in fiscal 2015 to over 27% in year five, and remaining between 26% and 27% after that. This is somewhat more conservative than the company's plans to return to 30% operating margins by fiscal 2019. Top-line growth to reach our cash flow-based valuation averages just over 4%, or just over 6% excluding the previously mentioned 13% decline forecast for fiscal 2015. Although we have increased our capital spending assumptions for fiscal 2015 through 2017, we model spending eventually returning to 4%-5% of sales. | |
Risk 10/13/2014 | |
Remaining fashionable and extending the brand are constant risks at Coach, and as such we assign the firm a high uncertainty rating. If Coach extends the brand beyond what consumers understand it to be, the company could damage its core image or create confusion in consumers' minds. Coach has embarked on an ambitious plan to expand its product lines and become a full lifestyle brand, not unlike many older and more prestigious European luxury brands, but the strategy is not without risk. It is also now undertaking a pullback on promotions and a repositioning of the store base, in the same year it will launch new product lines from recently hired chief design officer Stuart Vevers. New designers hold promise, but there is always the risk that new lines and looks are not accepted by the public. In addition, there is fashion and execution risk at the product levels. Footwear does leverage some competitive advantages in leather sourcing but, in our opinion, is a different category from bags and accessories. Men's accessories have lower risk, in our opinion, and we agree that the men's leather goods market is underserved, but we cannot be sure that the extension will not dilute the women's business. The new fashion designs have met with very positive reviews in the fashion press, yet no amount of testing and publicity can assure success with consumers. | |
While Coach has established a niche in the fashion world, and customers are very brand-loyal in the handbag and accessories category, it runs the risk that changes in tastes and preferences will eventually lead consumers to believe it is a brand for a past era. | |
Coach also has been successful thus far extending the brand into new geographies, and a portion of our fair value estimate is based on that continued expansion. Today, sales growth prospects appear strong, but there is a risk that new entrants or other market forces could derail the international projects that today look promising for Coach. | |
Management 10/13/2014 | |
Lew Frankfort was replaced by Victor Luis at the beginning of 2014. Luis, who was head of international operations, has been assembling a new team of designers and management, including a new creative director, Stuart Vevers. His experience includes terms as CEO of Baccarat, running North America, and with other LVMH brands earlier in his career. We believe his international experience will be important to develop the future growth of the firm. | |
A majority of Coach's board is independent, and officers and directors own nearly 5% of the shares outstanding. Frankfort is currently chairman but will retire after the November annual meeting. Jide Zeitlin, currently the lead outside director, will be appointed the next chairman of the board. Thus the chairman and CEO roles will remain split, a structure we view favorably. We believe management does a good job of providing transparency around the business. Overall, corporate governance is sound and aligned with shareholders, in our opinion, and we rate Coach's stewardship of shareholder capital as exemplary given its long record of above-average returns and recent actions to return cash to shareholders. We note that in 2013, Frankfort bought Coach shares on the open market, despite having announced his diminishing role. | |
Overview | |
Profile: | |
Coach is a manufacturer, distributor, and retailer of handbags and accessories and is expanding to broader product categories. Its products offer the quality of higher luxury brands but at more attractive price points. While 60% of sales come from more than 500 North American retail stores, Coach also sells its products through department stores, international shops, the Internet, its catalog, and Coach stores in Japan and China. Coach recently established a foothold in Europe, where it plans to reach $100 million in sales in fiscal 2015. | |
S&P 500 index data: S&P 500 Copyright @ 2014 |
COH IS
COACH INC (COH) INCOME STATEMENT | |||||
Fiscal year ends in June. USD in millions except per share data. | |||||
2010-06 | 2011-06 | 2012-06 | 2013-06 | 2014-06 | |
Revenue | 3,608 | 4,159 | 4,763 | 5,075 | 4,806 |
YOY growth rate | 15% | 15% | 7% | -5% | |
Avg. | 8% | ||||
CAGR | 7% | ||||
gs | 40% | 45% | 43% | 32% | 17% |
GDP - current $ | |||||
GDP raal | |||||
GDP const. | |||||
Cost of revenue | 974 | 1,135 | 1,297 | 1,377 | 1,509 |
Gross profit | 2,634 | 3,024 | 3,466 | 3,698 | 3,297 |
Operating expenses | |||||
Sales, General and administrative | 1,484 | 1,719 | 1,954 | 2,174 | 2,177 |
YOY growth rate | 16% | 14% | 11% | 0% | |
Avg. | 10% | ||||
CAGR | 10% | ||||
Operating income | 1,150 | 1,305 | 1,512 | 1,525 | 1,120 |
13% | 16% | 1% | -27% | ||
Avg. | 1% | ||||
CAGR | -1% | ||||
Other income (expense) | 2 | -4 | -6 | -4 | 2 |
Income before income taxes | 1,152 | 1,301 | 1,506 | 1,521 | 1,122 |
Provision for income taxes | 417 | 420 | 467 | 486 | 341 |
36% | 32% | 31% | 32% | 30% | |
Avg. | 32% | ||||
Net income from continuing operations | 735 | 881 | 1,039 | 1,034 | 781 |
Net income | 735 | 881 | 1,039 | 1,034 | 781 |
20% | 18% | -0% | -24% | ||
Avg. | 3% | ||||
CAGR | 2% | ||||
Net income available to common shareholders | 735 | 881 | 1,039 | 1,034 | 781 |
Earnings per share | |||||
Basic | 2.36 | 2.99 | 3.60 | 3.66 | 2.81 |
YOY growth rate | 27% | 20% | 2% | -23% | |
Avg. | 6% | ||||
CAGR | 4% | ||||
Diluted | 2.33 | 2.92 | 3.53 | 3.61 | 2.79 |
Weighted average shares outstanding | |||||
Basic | 311 | 295 | 288 | 282 | 278 |
Diluted | 316 | 302 | 294 | 286 | 280 |
EBITDA | 1,277 | 1,430 | 1,645 | 1,688 | 1,309 |
YOY growth rate | 12% | 15% | 3% | -22% | |
Avg. | 2% | ||||
CAGR | 1% | ||||
ROIC | 40% | 43% | 42% | 37% | 25% |
NOPAT | 778 | 883 | 1023 | 1031 | 757 |
Invested capital | 1,938 | 2,043 | 2,408 | 2,810 | 2,990 |
Free cash flow | 905 | 791 | 762 | 798 | 1,237 |
COH BS
COACH INC (COH) BALANCE SHEET | |||||
Fiscal year ends in June. USD in millions except per share data. | |||||
2010-06 | 2011-06 | 2012-06 | 2013-06 | 2014-06 | |
Assets | |||||
Current assets | |||||
Cash | |||||
Cash and cash equivalents | 596 | 700 | 917 | 1,063 | 592 |
Short-term investments | 100 | 2 | 72 | 277 | |
Total cash | 696 | 702 | 917 | 1,135 | 869 |
71% | 62% | 71% | 82% | 58% | |
Receivables | 109 | 143 | 174 | 175 | 199 |
Inventories | 363 | 422 | 504 | 525 | 526 |
Deferred income taxes | 77 | 94 | 95 | 111 | 113 |
Prepaid expenses | 30 | 38 | 45 | ||
Other current assets | 26 | 92 | 113 | 87 | 104 |
Total current assets | 1,303 | 1,452 | 1,805 | 2,071 | 1,855 |
Non-current assets | |||||
Property, plant and equipment | |||||
Land | 155 | 169 | 169 | 169 | 169 |
Fixtures and equipment | 364 | 427 | 525 | 598 | 579 |
Other properties | 515 | 570 | 638 | 700 | 734 |
Property and equipment, at cost | 1,034 | 1,166 | 1,332 | 1,467 | 1,482 |
CapEx | -132 | -166 | -135 | -15 | |
Accumulated Depreciation | -485 | -584 | -687 | -772 | -768 |
Property, plant and equipment, net | 548 | 582 | 644 | 695 | 714 |
Equity and other investments | 6 | 197 | 485 | ||
Goodwill | 306 | 331 | 376 | 345 | 361 |
Intangible assets | 10 | 10 | 10 | 10 | 10 |
Deferred income taxes | 156 | 104 | 95 | 85 | 112 |
Other long-term assets | 138 | 156 | 174 | 129 | 127 |
Total non-current assets | 1,164 | 1,183 | 1,300 | 1,461 | 1,808 |
Total assets | 2,467 | 2,635 | 3,104 | 3,532 | 3,663 |
Liabilities and stockholders' equity | |||||
Liabilities | |||||
Current liabilities | |||||
Short-term debt | 1 | 1 | 22 | 0 | 140 |
Accounts payable | 106 | 119 | 155 | 179 | 154 |
Accrued liabilities | 423 | 408 | 455 | 448 | 426 |
Other current liabilities | 65 | 86 | 95 | 93 | |
Total current liabilities | 529 | 593 | 718 | 723 | 813 |
NWC | 774 | 859 | 1,087 | 1,348 | 1,042 |
-85 | -228 | -261 | 306 | ||
Non-current liabilities | |||||
Long-term debt | 24 | 23 | 1 | 0 | |
Deferred taxes liabilities | 60 | ||||
Deferred revenues | 163 | 139 | |||
Other long-term liabilities | 409 | 244 | 253 | 400 | 370 |
Total non-current liabilities | 433 | 430 | 393 | 400 | 429 |
Total liabilities | 962 | 1,023 | 1,111 | 1,123 | 1,242 |
Stockholders' equity | |||||
Common stock | 3 | 3 | 3 | 3 | |
Additional paid-in capital | 1,503 | 2,000 | 2,327 | 2,520 | 2,646 |
Retained earnings | -30 | -446 | -387 | -102 | -219 |
Accumulated other comprehensive income | 32 | 55 | 50 | -12 | -9 |
Total stockholders' equity | 1,505 | 1,613 | 1,993 | 2,409 | 2,421 |
Total liabilities and stockholders' equity | 2,467 | 2,635 | 3,104 | 3,532 | 3,663 |
COA CF
COACH INC (COH) Statement of CASH FLOW | |||||
Fiscal year ends in June. USD in millions except per share data. | |||||
2010-06 | 2011-06 | 2012-06 | 2013-06 | 2014-06 | |
Cash Flows From Operating Activities | |||||
Net income | 735 | 881 | 1,039 | 1,034 | 781 |
Depreciation & amortization | 127 | 125 | 133 | 163 | 189 |
Deferred income taxes | -17 | 40 | 28 | -7 | -23 |
Stock based compensation | 81 | 96 | 108 | 120 | 95 |
Accounts receivable | 4 | -32 | -27 | -14 | -24 |
Inventory | -34 | -65 | -72 | -39 | -64 |
Accounts payable | 1 | 10 | 36 | 30 | -30 |
Accrued liabilities | 68 | 54 | 84 | 99 | 14 |
Other working capital | 64 | -29 | -40 | 27 | -58 |
Other non-cash items | -39 | -46 | -67 | 0 | 105 |
Net cash provided by operating activities | 991 | 1,033 | 1,222 | 1,414 | 985 |
Cash Flows From Investing Activities | |||||
Investments in property, plant, and equipment | -81 | -148 | -184 | -241 | -220 |
Acquisitions, net | -1 | -53 | -147 | -4 | |
Purchases of investments | -230 | -234 | -171 | -631 | |
Sales/Maturities of investments | 130 | 322 | 2 | 146 | |
Other investing charges | -24 | -11 | |||
Net cash used for investing activities | -182 | -60 | -259 | -570 | -708 |
Cash Flows From Financing Activities | |||||
Short-term borrowing | -7 | ||||
Long-term debt issued | 450 | ||||
Long-term debt repayment | -1 | -1 | -1 | -22 | -310 |
Excess tax benefit from stock based compensation | 28 | 58 | 68 | 27 | 12 |
Warrant issued | 185 | ||||
Repurchases of treasury stock | -1,150 | -1,098 | -700 | -400 | -525 |
Cash dividends paid | -94 | -178 | -260 | -340 | -376 |
Other financing activities | 205 | 344 | -34 | 46 | 2 |
Net cash provided by (used for) financing activities | -1,020 | -875 | -742 | -689 | -748 |
Effect of exchange rate changes | 7 | 5 | -3 | -9 | -1 |
Net change in cash | -204 | 103 | 217 | 146 | -471 |
Cash at beginning of period | 800 | 596 | 700 | 917 | 1,063 |
Cash at end of period | 596 | 700 | 917 | 1,063 | 592 |
Free Cash Flow | |||||
Operating cash flow | 991 | 1,033 | 1,222 | 1,414 | 985 |
Capital expenditure | -81 | -148 | -184 | -241 | -220 |
Free cash flow | 910 | 886 | 1,037 | 1,173 | 766 |
Supplemental schedule of cash flow data | |||||
Cash paid for income taxes | 364 | 364 | 439 | 445 | |
Cash paid for interest | 1 | 1 | 2 | 1 |
COA Ratios
Key Ratios -> Profitability | |||||
Margins % of Sales | 2010-06 | 2011-06 | 2012-06 | 2013-06 | 2014-06 |
Revenue | 100 | 100 | 100 | 100 | 100 |
COGS | 27.0 | 27.3 | 27.2 | 27.1 | 31.4 |
Gross Margin | 73.0 | 72.7 | 72.8 | 72.9 | 68.6 |
SG&A | 41.1 | 41.3 | 41.0 | 42.8 | 45.3 |
R&D | |||||
Other | |||||
Operating Margin | 31.9 | 31.4 | 31.7 | 30.0 | 23.3 |
Net Int Inc & Other | 0.1 | -0.1 | -0.1 | -0.1 | 0.1 |
EBT Margin | 31.9 | 31.3 | 31.6 | 30.0 | 23.4 |
Profitability | 2010-06 | 2011-06 | 2012-06 | 2013-06 | 2014-06 |
Tax Rate % | 36.2 | 32.3 | 31.0 | 32.0 | 30.4 |
Net Margin % | 20.4 | 21.2 | 21.8 | 20.4 | 16.3 |
Asset Turnover (Average) | 1.4 | 1.6 | 1.7 | 1.5 | 1.3 |
Return on Assets % | 29.2 | 34.5 | 36.2 | 31.2 | 21.7 |
Financial Leverage (Average) | 1.6 | 1.6 | 1.6 | 1.5 | 1.5 |
Return on Equity % | 45.9 | 56.5 | 57.6 | 47.0 | 32.4 |
Return on Invested Capital % | 45.1 | 55.6 | 56.9 | 46.7 | 31.4 |
Interest Coverage | |||||
Key Ratios -> Growth | 2010-06 | 2011-06 | 2012-06 | 2013-06 | 2014-06 |
Revenue % | |||||
Year over Year | 11.7 | 15.3 | 14.5 | 6.6 | -5.3 |
3-Year Average | 11.4 | 9.4 | 13.8 | 12.1 | 4.9 |
5-Year Average | 16.1 | 14.5 | 12.8 | 9.8 | 8.3 |
10-Year Average | 20.7 | 21.0 | 20.8 | 18.2 | 13.8 |
Operating Income % | |||||
Year over Year | 18.3 | 13.5 | 15.9 | 0.8 | -26.5 |
3-Year Average | 5.0 | 4.4 | 15.9 | 9.9 | -5.0 |
5-Year Average | 13.1 | 11.3 | 8.8 | 5.9 | 2.9 |
10-Year Average | 35.3 | 29.1 | 27.5 | 20.1 | 9.7 |
Net Income % | |||||
Year over Year | 17.9 | 19.9 | 18.0 | -0.4 | -24.5 |
3-Year Average | 3.5 | 4.0 | 18.6 | 12.1 | -3.9 |
5-Year Average | 13.6 | 12.3 | 9.4 | 5.7 | 4.6 |
10-Year Average | 34.3 | 30.0 | 28.3 | 21.6 | 11.6 |
EPS % | |||||
Year over Year | 22.0 | 25.3 | 20.9 | 2.3 | -22.7 |
3-Year Average | 9.8 | 10.4 | 22.7 | 15.7 | -1.5 |
5-Year Average | 18.4 | 18.1 | 14.9 | 10.7 | 7.9 |
10-Year Average | 36.3 | 31.4 | 31.1 | 24.8 | 15.2 |
Key Ratios -> Cash Flow | 2010-06 | 2011-06 | 2012-06 | 2013-06 | 2014-06 |
Cash Flow Ratios | |||||
Operating Cash Flow Growth % YOY | 428 | ||||
Free Cash Flow Growth % YOY | -266 | ||||
Cap Ex as a % of Sales | 2.3 | 3.6 | 3.9 | 4.8 | 4.6 |
Free Cash Flow/Sales % | 25.2 | 21.3 | 21.8 | 23.1 | 15.9 |
Free Cash Flow/Net Income | 1.2 | 1.0 | 1.0 | 1.1 | 1.0 |
Key Ratios -> Financial Health | 2010-06 | 2011-06 | 2012-06 | 2013-06 | 2014-06 |
Balance Sheet Items (in %) | |||||
Cash & Short-Term Investments | 28 | 27 | 30 | 32 | 24 |
Accounts Receivable | 4 | 5 | 6 | 5 | 5 |
Inventory | 15 | 16 | 16 | 15 | 14 |
Other Current Assets | 5 | 7 | 7 | 7 | 7 |
Total Current Assets | 53 | 55 | 58 | 59 | 51 |
Net PP&E | 22 | 22 | 21 | 20 | 19 |
Intangibles | 13 | 13 | 12 | 10 | 10 |
Other Long-Term Assets | 12 | 10 | 9 | 12 | 20 |
Total Assets | 100 | 100 | 100 | 100 | 100 |
Accounts Payable | 4 | 5 | 5 | 5 | 4 |
Short-Term Debt | 0 | 0 | 1 | 0 | 4 |
Taxes Payable | |||||
Accrued Liabilities | 17 | 16 | 15 | 13 | 12 |
Other Short-Term Liabilities | 2 | 3 | 3 | 3 | |
Total Current Liabilities | 21 | 23 | 23 | 20 | 22 |
Long-Term Debt | 1 | 1 | 0 | 0 | |
Other Long-Term Liabilities | 17 | 15 | 13 | 11 | 12 |
Total Liabilities | 39 | 39 | 36 | 32 | 34 |
Total Stockholders' Equity | 61 | 61 | 64 | 68 | 66 |
Total Liabilities & Equity | 100 | 100 | 100 | 100 | 100 |
Liquidity/Financial Health | 2010-06 | 2011-06 | 2012-06 | 2013-06 | 2014-06 |
Current Ratio | 2.5 | 2.5 | 2.5 | 2.9 | 2.3 |
Quick Ratio | 1.5 | 1.4 | 1.5 | 1.8 | 1.3 |
Financial Leverage | 1.6 | 1.6 | 1.6 | 1.5 | 1.5 |
Debt/Equity | 0.0 | 0.0 | |||
Key Ratios -> Efficiency Ratios | 2010-06 | 2011-06 | 2012-06 | 2013-06 | 2014-06 |
Efficiency | |||||
Days Sales Outstanding | 11.0 | 11.1 | 12.2 | 12.6 | 14.2 |
Days Inventory | 129.2 | 126.2 | 130.3 | 136.4 | 127.1 |
Payables Period | 39.1 | 36.1 | 38.6 | 44.3 | 40.2 |
Cash Conversion Cycle | 101.1 | 101.3 | 103.9 | 104.7 | 101.0 |
Receivables Turnover | 33.1 | 33.0 | 30.0 | 29.0 | 25.7 |
Inventory Turnover | 2.8 | 2.9 | 2.8 | 2.7 | 2.9 |
Fixed Assets Turnover | 6.3 | 7.4 | 7.8 | 7.6 | 6.8 |
Asset Turnover | 1.4 | 1.6 | 1.7 | 1.5 | 1.3 |
COA Key Stats
From Yahoo! Finance | |||||
Key Statistics | |||||
Data provided by Capital IQ, except where noted. | Trading Information | ||||
Valuation Measures | Stock Price History | ||||
Market Cap (intraday)5: | 9.74B | Beta: | 0.75 | ||
Enterprise Value (Nov 19, 2014)3: | 8.99B | 52-Week Change3: | -34.0% | ||
Trailing P/E (ttm, intraday): | 14.4 | S&P500 52-Week Change3: | 15.2% | ||
Forward P/E (fye Jun 28, 2016)1: | 17.2 | 52-Week High (Nov 29, 2013)3: | 57.95 | ||
PEG Ratio (5 yr expected)1: | 3.4 | 52-Week Low (Nov 5, 2014)3: | 32.72 | ||
Price/Sales (ttm): | 2.1 | 50-Day Moving Average3: | 34.69 | ||
Price/Book (mrq): | 4.0 | 200-Day Moving Average3: | 36.62 | ||
Enterprise Value/Revenue (ttm)3: | 1.9 | Share Statistics | |||
Enterprise Value/EBITDA (ttm)6: | 6.9 | Avg Vol (3 month)3: | 4,109,440 | ||
Financial Highlights | Avg Vol (10 day)3: | 3,709,440 | |||
Fiscal Year | Shares Outstanding5: | 275.59M | |||
Fiscal Year Ends: | 6/28/14 | Float: | 273.22M | ||
Most Recent Quarter (mrq): | 9/27/14 | % Held by Insiders1: | 0.91% | ||
Profitability | % Held by Institutions1: | 89.30% | |||
Profit Margin (ttm): | 14.5% | Shares Short (as of Oct 31, 2014)3: | 26.04M | ||
Operating Margin (ttm): | 23.7% | Short Ratio (as of Oct 31, 2014)3: | 5.4 | ||
Management Effectiveness | Short % of Float (as of Oct 31, 2014)3: | 9.5% | |||
Return on Assets (ttm): | 19.5% | Shares Short (prior month)3: | 27.73M | ||
Return on Equity (ttm): | 28.3% | Dividends & Splits | |||
Income Statement | Forward Annual Dividend Rate4: | 1.35 | |||
Revenue (ttm): | 4.69B | Forward Annual Dividend Yield4: | 3.8% | ||
Revenue Per Share (ttm): | 17 | Trailing Annual Dividend Yield3: | 1.35 | ||
Qtrly Revenue Growth (yoy): | -9.70% | Trailing Annual Dividend Yield3: | 3.8% | ||
Gross Profit (ttm): | 3.30B | 5 Year Average Dividend Yield4: | 2.3% | ||
EBITDA (ttm)6: | 1.30B | Payout Ratio4: | 55.0% | ||
Net Income Avl to Common (ttm): | 682.54M | Dividend Date3: | 12/29/14 | ||
Diluted EPS (ttm): | 2.45 | Ex-Dividend Date4: | 12/3/14 | ||
Qtrly Earnings Growth (yoy): | -45.30% | Last Split Factor (new per old)2: | 2:01 | ||
Balance Sheet | Last Split Date3: | 4/5/05 | |||
Total Cash (mrq): | 907.50M | ||||
Total Cash Per Share (mrq): | 3.29 | ||||
Total Debt (mrq): | 170.00M | ||||
Total Debt/Equity (mrq): | 6.97 | ||||
Current Ratio (mrq): | 2.37 | ||||
Book Value Per Share (mrq): | 8.85 | ||||
Cash Flow Statement | |||||
Operating Cash Flow (ttm): | 960.21M | ||||
Levered Free Cash Flow (ttm): | 705.62M | ||||
See Key Statistics Help for definitions of terms used. | |||||
Abbreviation Guide: K = Thousands; M = Millions; B = Billions | |||||
mrq = Most Recent Quarter (as of Sep 27, 2014) | |||||
ttm = Trailing Twelve Months (as of Sep 27, 2014) | |||||
yoy = Year Over Year (as of Sep 27, 2014) | |||||
lfy = Last Fiscal Year (as of Jun 28, 2014) | |||||
fye = Fiscal Year Ending | |||||
1 Data provided by Thomson Reuters | |||||
2 Data provided by EDGAR Online | |||||
3 Data derived from multiple sources or calculated by Yahoo! Finance | |||||
4 Data provided by Morningstar, Inc. | |||||
5 Shares outstanding is taken from the most recently filed quarterly or annual report and Market Cap is calculated using shares outstanding. | |||||
6 EBITDA is calculated by Capital IQ using methodology that may differ from that used by a company in its reporting | |||||
Currency in USD. |
Analyst Note GPS
Gap has a positive moat trend, but we expect near-term weakness in the core Gap brand. | |
Morningstar, Inc | |
Bridget Weishaar | |
Analyst Note 11/06/2014 | |
In tonight's October monthly sales report, Gap reported third-quarter sales and updated earnings guidance. As expected, Gap's third-quarter comp growth came in on the weak side, suffering under the pressure of product missteps at the core Gap brand. That being said, guidance for third-quarter earnings per share in the range of $0.78-$0.79 was better than we'd expected, with management stating strength in both gross margin rate and operating expenses. We await additional commentary on earnings performance but tentatively think that this could be a reflection of improving inventory management and supply chain investments--the basis for our positive moat trend rating. Although we expect it to take some time to get the Gap product back on track, we remain comfortable in the intrinsic strength of the brand portfolio and our narrow moat rating. We expect no change to our $48 fair value estimate as we expect the unexpected strength in margin to offset most of the weakness in the top line. We look forward to additional color when the company presents its third-quarter results on Nov. 20. | |
Total third-quarter comparable sales declined 2% year over year with Gap Global down 5%, Banana Republic Global flat, and Old Navy Global up 1%. For the third quarter, Gap's net sales were $3.97 billion, down from $3.98 billion in the third quarter of fiscal 2013. Management now expects diluted earnings per share of $0.78 to $0.79 for the quarter (including a $0.06 benefit from a lower effective tax rate versus third quarter 2013), up from $0.72 in third quarter fiscal 2013 and better than expectations at the September sales update. As a reminder, in the September sales release, management had expected gross margins for the third quarter to be moderately down from the prior year and that operating expenses would be approximately 8% above the third quarter of 2013. | |
Investment Thesis 08/25/2014 | |
Gap is one of the most iconic of American brands, selling basics at affordable prices. The company scored a second hit with Old Navy, which has a slightly more family and value oriented bent. Together the two brands compose almost 80% of the company’s revenue. Although competition has flooded the space, namely through fast fashion retailers H&M, Zara, and Uniqlo, the company has delivered about 14% average annual adjusted return on invested capital over the last three years--evidence of brand strength and a narrow economic moat, in our opinion. The challenge the company now faces is to minimize fashion misses and inventory mismatches through a responsive supply chain, to become more technologically sophisticated for younger consumers, and to maintain a differentiated and relevant brand identity in the face of growing fast fashion competition. | |
On many fronts Gap is succeeding. The company has been right-sizing its store base while growing its online presence, shedding about 14% of the North America specialty fleet since 2008 and growing e-commerce to 14% of sales in 2013 (roughly doubling in five years). In fact, rebalancing the portfolio toward online, outlet stores (550 by the end of 2014), and franchise stores (450 stores by end of 2014) has contributed about 12 points of contribution shifts toward higher returning channels since 2008 (now 31% of business). | |
We think further margin expansion is on the horizon and that this is an underappreciated opportunity. We believe that investments in seamless inventory, omni-channel, and responsive supply chain development could narrow the spread between Gap's 12% average operating margin (last three years) and the high teens margins at fast-fashion competitors Inditex and H&M. Successful execution of these projects should put Gap’s planning calendar and manufacturing and distribution processes more in line with global competition and enable a pull-based ordering system which better aligns supply and demand and increases full-price sell-through. We think returns can begin to be seen in 2015 and that full seamless inventory and 50% penetration of the responsive model assortment can be achieved by the end of 2016. | |
Economic Moat 08/25/2014 | |
We are maintaining Gap’s narrow moat rating primarily to reflect the strength of the Gap and Old Navy brand intangible assets as well as for the secondary reason of the cost efficiencies from economies of scale that we expect will continue to allow the company to achieve adjusted ROIC’s in the midteens for at least the next 10 years, well north of its 10% cost of capital. | |
The Gap and Old Navy brands account for almost 80% of the company’s revenue and have shown strength across multiple geographies and distribution channels. In its 2014 publication, The Most Valuable U.S. Retail Brands, Interbrand ranked Gap number 24 and Old Navy number 26 on its list. On the Global Brand Survey completed in 2013, Interbrand ranked Gap number 100. We think this demonstrates the continuing cultural relevance of the brand, almost 45 years after its founding. Although fast fashion retailers including H&M, Zara, and Uniqlo have moved into the space, The Gap and Old Navy have remained synonymous with all-American casual basics at an affordable price. This has kept customers coming to its stores and willing to pay a price high enough to roughly maintain a gross margin of 39.0% in 2013 (a 40 basis point decline) versus 33.7% at American Eagle (a 630-basis-point decline) and 17.1% at Aeropostale (a 760 basis point decline). | |
Scale also has provided the company with cost advantages, allowing Gap and Old Navy to be relatively price competitive with fast fashion retailers, while also preserving profitability. The company boasts more than 3,000 total stores, with over 1,300 Gaps and over 1,000 Old Navys. According to company reports, Gap Inc. generated $16 billion in revenue in 2013 versus a $2 billion mean at its U.S. competitors (Abercrombie & Fitch, Aeropostale, American Eagle, Ann Taylor, Children's Place, Express, and Urban Outfitters). Operating margin averaged 12% over the last three years versus 18% at narrow-moat H&M and 19% at narrow-moat Inditex. Although below its large fast-fashion retailers, we note that this is still well above domestic competitors including Abercrombie & Fitch at 7%, American Eagle at 10%, and Aeropostale at (0.4)%. According to company documents, the average operating margin in 2013 of all U.S. peers (Abercrombie & Fitch, Aeropostale, American Eagle, Ann Taylor, Children's Place, Express, and Urban Outfitters) was only 5% versus Gap’s 13%. Over the last five years, earnings per share has grown at a 15% compound annual growth rate versus the U.S. peers mean of a 38% decline. | |
Valuation 08/25/2014 | |
We are slightly lowering our fair value estimate to $48 from $50 as we see weakness in the core Gap brand pressuring near-term performance and the transition to a new CEO to increasing short-term volatility. That said, we continue to like the long-term story and we see operating margin expansion as the main driver of valuation as Gap has invested heavily in technology and supply chain systems which we believe can narrow the margin disparity between Gap and its global fast-fashion competitors. In our updated model, we think Gap can reach an operating margin of 15.4% in five years (down from 15.9% in our prior model) from 13.3% currently. This is still well below the high-teens margins of fast-fashion competitors. This reflects our belief that the company is successfully executing on its responsive supply chain, omnichannel, and seamless inventory initiatives as evidenced by its work on fabric platforming, reserve in store, and order in store. In 2014, we are continuing to model 3% revenue growth but now expect the operating margin to decline to 12.7% from 13.3% in 2013 versus our prior expectation for a 10-basis-point year-over-year increase in operating margin to 13.4%. We think poor merchandising (product was too spring-forward) and heavy inventory levels weighed on first-half results. In our opinion, products at the core Gap brand remain uninspiring and the new ad campaign from Wieden+Kennedy appears to be failing to resonate with consumers. We expect discounting to weigh on 2014 margins. However, we are encouraged that Banana Republic is showing some signs of a turnaround with improved marketing and more contemporary merchandising. Ultimately we see full year top-line growth driven by flat comparable sales and a 3% increase in stores. Over the next five years, we continue to expect 4% average annual revenue growth driven by 2% comparable sales growth on average and 3% new store growth weighted toward factory stores, Asia expansion, and franchises. We think operating margins will expand from 13.3% in 2013 to 15.4% in 2018 (7% average annual operating income growth) on improved responsiveness and supply chain management. This estimate is slightly lower than our prior expectation for operating margin to reach 15.9% in 2018 as we see deleverage due to the core Gap brand offsetting some of the upside of investments in the near term. We note that this is still below average high teen margins at H&M and Inditex. | |
Risk 10/09/2014 | |
We are giving Gap a medium uncertainty rating. We believe that exposure to economic risks including unemployment, wage growth, consumer confidence, and debt is compounded by fashion risk, a competitive and overcrowded apparel retail space with no barriers to entry, international expansion, and difficulty in implementing change in a large organization. From fiscal 2011 through 2013, monthly comparable sales have ranged from an increase of 10% to a decrease of 3%. Over the past five years, operating margins have ranged from 13.4% in fiscal 2010 to 9.9% in fiscal 2011. | |
Additionally, we believe the company could be facing some margin headwinds. With Asia being a high-growth geography and approximately 28% of purchases by dollar value from factories in China, Gap is exposed to rising wage costs in Asia. This could mean increased pressure on margins. Omni-channel investments may also have a less than expected impact on driving top-line growth and gross margin expansion. | |
Offsetting these risks is Gap's established brand portfolio. We think the portfolio strategy at various price points hedges some of the risk of fashion misses or unique customer weakness at any one brand. Additionally, strong brands may inspire more customer loyalty and be slightly more sticky than brands with less history. | |
Management 10/09/2014 | |
We are giving Gap a Standard stewardship rating. Glenn Murphy is expected to depart from his CEO position in February 2015 and to be replaced by internal employee Art Peck. Although we're sorry to see Murphy go, we think Peck is a sound choice for CEO. Peck has the experience and skill set necessary to continue to execute Gap’s strategic goals as seamlessly as possible. Peck joined the company in 2005 after more than 20 years at Boston Consulting Group, and has worked in various brand, strategic, and operational roles within the company. He is currently serving as president of Gap’s growth, innovation, and digital operations, which we think positions him perfectly to continue Gap’s global expansion, digital strategy, and margin improvement initiatives. Having worked closely with Murphy, Peck should be able to guide Gap further along the existing strategic path. We expect no outsized swings in vision or goals. | |
The board is composed of 10 directors, nine of whom are independent. All directors and executive officers combined own 29% of stock, with members of the Fisher family being the majority of the holders. Total ownership by various members of the Fisher family is 40.7% of outstanding shares and is held by Doris Fisher, John J. Fisher, Robert J. Fisher, William S. Fisher, and Fisher Core Holdings. We think that a high degree of shareownership aligns the board’s interest with shareholders. Over the last five years, Gap’s stock has delivered a 30% compound annual growth rate, well ahead of the S&P 500 which grew at 19%. We are satisfied with management’s use of cash to invest in technology and better supply chain management, to grow high-margin brands and distribution channels, and to return cash to shareholders through dividends and share repurchases. | |
Overview | |
Profile: | |
Gap is a global apparel and accessories retailer for men, women, and children operating under the brands of Gap, Banana Republic, Old Navy, Piperlime, Athleta, and Intermix. Distribution channels include over 3,000 specialty and outlet stores, online, and franchises. About 77% of revenue is generated in the U.S. and almost 80% of revenue comes from the Gap and Old Navy brands. | |
S&P 500 index data: S&P 500 Copyright @ 2014 |
GPS IS
GAP INC (GPS) INCOME STATEMENT | |||||
Fiscal year ends in January. USD in millions except per share data. | |||||
2010-01 | 2011-01 | 2012-01 | 2013-01 | 2014-01 | |
Revenue | 14,197 | 14,664 | 14,549 | 15,651 | 16,148 |
YOY growth rate | 3% | -1% | 8% | 3% | |
Avg. | 3% | ||||
CAGR | 3% | ||||
gs | 19% | 21% | 17% | 32% | 32% |
GDP - current $ | |||||
Cost of revenue | 8,473 | 8,775 | 9,275 | 9,480 | 9,855 |
Gross profit | 5,724 | 5,889 | 5,274 | 6,171 | 6,293 |
Operating expenses | |||||
Other operating expenses | 3,909 | 3,921 | 3,836 | 4,229 | 4,144 |
Total operating expenses | 3,909 | 3,921 | 3,836 | 4,229 | 4,144 |
Operating income | 1,815 | 1,968 | 1,438 | 1,942 | 2,149 |
8% | -27% | 35% | 11% | ||
Avg. | 7% | ||||
CAGR | 4% | ||||
Interest Expense | 6 | 74 | 87 | 61 | |
Other income (expense) | 7 | 14 | 5 | 6 | 5 |
Income before income taxes | 1,816 | 1,982 | 1,369 | 1,861 | 2,093 |
Provision for income taxes | 714 | 778 | 536 | 726 | 813 |
39% | 39% | 39% | 39% | 39% | |
Avg. | 39% | ||||
Net income from continuing operations | 1,102 | 1,204 | 833 | 1,135 | 1,280 |
Net income | 1,102 | 1,204 | 833 | 1,135 | 1,280 |
9% | -31% | 36% | 13% | ||
Avg. | 7% | ||||
CAGR | 4% | ||||
Net income available to common shareholders | 1,102 | 1,204 | 833 | 1,135 | 1,280 |
Earnings per share | |||||
Basic | 1.59 | 1.89 | 1.57 | 2.35 | 2.78 |
YOY growth rate | 19% | -17% | 50% | 18% | |
Avg. | 17% | ||||
CAGR | 15% | ||||
Diluted | 1.58 | 1.88 | 1.56 | 2.33 | 2.74 |
Weighted average shares outstanding | |||||
Basic | 694 | 636 | 529 | 482 | 461 |
Diluted | 699 | 641 | 533 | 488 | 467 |
EBITDA | 2,477 | 2,630 | 2,035 | 2,507 | 2,690 |
YOY growth rate | 6% | -23% | 23% | 7% | |
Avg. | 4% | ||||
CAGR | 2% | ||||
ROIC | 19% | 24% | 16% | 23% | 24% |
NOPAT | 1105 | 1198 | 876 | 1182 | 1308 |
Invested capital | 5854 | 4970 | 5353 | 5126 | 5429 |
Free cash flow | 1760 | 2402 | 908 | 2007 | 1398 |
GPS BS
GAP INC (GPS) BALANCE SHEET | |||||
Fiscal year ends in January. USD in millions except per share data. | |||||
2010-01 | 2011-01 | 2012-01 | 2013-01 | 2014-01 | |
Assets | |||||
Current assets | |||||
Cash | |||||
Cash and cash equivalents | 2,348 | 1,561 | 1,885 | 1,460 | 1,510 |
Short-term investments | 225 | 100 | 50 | ||
Total cash | 2,573 | 1,661 | 1,885 | 1,510 | 1,510 |
30% | 19% | 20% | 16% | 15% | |
Receivables | 205 | 297 | 331 | 462 | |
Inventories | 1,477 | 1,620 | 1,615 | 1,758 | 1,928 |
Deferred income taxes | 193 | 190 | 220 | 179 | |
Prepaid expenses | 260 | 145 | 211 | 242 | |
Other current assets | 161 | 105 | 512 | 102 | 109 |
Total current assets | 4,664 | 3,926 | 4,309 | 4,132 | 4,430 |
Non-current assets | |||||
Property, plant and equipment | |||||
Land | 1,086 | 1,093 | 1,096 | 1,101 | 1,106 |
Fixtures and equipment | 3,249 | 3,340 | 3,423 | 3,542 | 3,666 |
Other properties | 3,092 | 3,140 | 3,264 | 3,267 | 3,387 |
Property and equipment, at cost | 7,427 | 7,573 | 7,783 | 7,910 | 8,159 |
CapEx | -146 | -210 | -127 | -249 | |
Accumulated Depreciation | -4,799 | -5,010 | -5,260 | -5,291 | -5,401 |
Property, plant and equipment, net | 2,628 | 2,563 | 2,523 | 2,619 | 2,758 |
Goodwill | 99 | 99 | 99 | 184 | 180 |
Intangible assets | 61 | 57 | 77 | 132 | 131 |
Other long-term assets | 533 | 420 | 414 | 403 | 350 |
Total non-current assets | 3,321 | 3,139 | 3,113 | 3,338 | 3,419 |
Total assets | 7,985 | 7,065 | 7,422 | 7,470 | 7,849 |
Liabilities and stockholders' equity | |||||
Liabilities | |||||
Current liabilities | |||||
Short-term debt | 59 | 25 | |||
Accounts payable | 1,027 | 1,049 | 1,066 | 1,144 | 1,242 |
Taxes payable | 41 | 50 | 5 | 108 | 36 |
Accrued liabilities | 1,063 | 996 | 395 | 395 | 369 |
Other current liabilities | 603 | 697 | 773 | ||
Total current liabilities | 2,131 | 2,095 | 2,128 | 2,344 | 2,445 |
NWC | 2,533 | 1,831 | 2,181 | 1,788 | 1,985 |
702 | -350 | 393 | -197 | ||
Non-current liabilities | |||||
Long-term debt | 890 | 1,606 | 1,246 | 1,369 | |
Capital leases | 933 | ||||
Other long-term liabilities | 963 | 986 | 973 | ||
Total non-current liabilities | 963 | 890 | 2,539 | 2,232 | 2,342 |
Total liabilities | 3,094 | 2,985 | 4,667 | 4,576 | 4,787 |
Stockholders' equity | |||||
Common stock | 55 | 55 | 55 | ||
Additional paid-in capital | 2,935 | 2,939 | 2,867 | 2,864 | 2,899 |
Retained earnings | 10,815 | 11,767 | 12,364 | 13,259 | 14,218 |
Treasury stock | -9,069 | -10,866 | -12,760 | -13,465 | -14,245 |
Accumulated other comprehensive income | 210 | 240 | 229 | 181 | 135 |
Total stockholders' equity | 4,891 | 4,080 | 2,755 | 2,894 | 3,062 |
Total liabilities and stockholders' equity | 7,985 | 7,065 | 7,422 | 7,470 | 7,849 |
GPS CF
GAP INC (GPS) Statement of CASH FLOW | |||||
Fiscal year ends in January. USD in millions except per share data. | |||||
2010-01 | 2011-01 | 2012-01 | 2013-01 | 2014-01 | |
Cash Flows From Operating Activities | |||||
Net income | 1,102 | 1,204 | 1,135 | 1,280 | |
Depreciation & amortization | 655 | 648 | 592 | 559 | 536 |
Amortization of debt discount/premium and issuance costs | -82 | -86 | -86 | -76 | -66 |
Deferred income taxes | -50 | 93 | -11 | -37 | 69 |
Stock based compensation | 64 | 77 | 58 | 113 | 116 |
Inventory | 43 | -127 | 4 | -143 | -193 |
Accounts payable | 40 | -7 | 11 | 91 | 105 |
Accrued liabilities | -23 | -141 | -45 | 68 | -5 |
Income taxes payable | 64 | 66 | -91 | 146 | -74 |
Other working capital | 105 | -38 | 27 | 70 | 3 |
Other non-cash items | 10 | 55 | 904 | 10 | -66 |
Net cash provided by operating activities | 1,928 | 1,744 | 1,363 | 1,936 | 1,705 |
Cash Flows From Investing Activities | |||||
Investments in property, plant, and equipment | -334 | -557 | -548 | -659 | -670 |
Property, plant, and equipment reductions | 1 | ||||
Acquisitions, net | -129 | ||||
Purchases of investments | -350 | -475 | -50 | -200 | |
Sales/Maturities of investments | 125 | 600 | 150 | 150 | 50 |
Other investing charges | 21 | 3 | -6 | -6 | -4 |
Net cash used for investing activities | -537 | -429 | -454 | -844 | -624 |
Cash Flows From Financing Activities | |||||
Short-term borrowing | 3 | 16 | -19 | ||
Long-term debt issued | 1,646 | 144 | |||
Long-term debt repayment | -50 | -400 | |||
Excess tax benefit from stock based compensation | 4 | 11 | 13 | 1 | 6 |
Common stock issued | 174 | ||||
Repurchases of treasury stock | -547 | -1,959 | -2,092 | -1,030 | -979 |
Cash dividends paid | -234 | -252 | -236 | -240 | -321 |
Other financing activities | 56 | 70 | 51 | 33 | 146 |
Net cash provided by (used for) financing activities | -771 | -2,127 | -602 | -1,481 | -1,004 |
Effect of exchange rate changes | 13 | 25 | 17 | -36 | -27 |
Net change in cash | 633 | -787 | 324 | -425 | 50 |
Cash at beginning of period | 1,715 | 2,348 | 1,561 | 1,885 | 1,460 |
Cash at end of period | 2,348 | 1,561 | 1,885 | 1,460 | 1,510 |
Free Cash Flow | |||||
Operating cash flow | 1,928 | 1,744 | 1,363 | 1,936 | 1,705 |
Capital expenditure | -334 | -557 | -548 | -659 | -670 |
Free cash flow | 1,594 | 1,187 | 815 | 1,277 | 1,035 |
Supplemental schedule of cash flow data | |||||
Cash paid for income taxes | 702 | 677 | 599 | 582 | 805 |
Cash paid for interest | 3 | 1 | 45 | 83 | 77 |
GPS Ratios
Key Ratios -> Profitability | |||||
Margins % of Sales | 2010-01 | 2011-01 | 2012-01 | 2013-01 | 2014-01 |
Revenue | 100 | 100 | 100 | 100 | 100 |
COGS | 59.7 | 59.8 | 63.8 | 60.6 | 61.0 |
Gross Margin | 40.3 | 40.2 | 36.3 | 39.4 | 39.0 |
SG&A | |||||
R&D | |||||
Other | 27.5 | 26.7 | 26.4 | 27.0 | 25.7 |
Operating Margin | 12.8 | 13.4 | 9.9 | 12.4 | 13.3 |
Net Int Inc & Other | 0.0 | 0.1 | -0.5 | -0.5 | -0.4 |
EBT Margin | 12.8 | 13.5 | 9.4 | 11.9 | 13.0 |
Profitability | 2010-01 | 2011-01 | 2012-01 | 2013-01 | 2014-01 |
Tax Rate % | 39.3 | 39.3 | 39.2 | 39.0 | 38.8 |
Net Margin % | 7.8 | 8.2 | 5.7 | 7.3 | 7.9 |
Asset Turnover (Average) | 1.8 | 2.0 | 2.0 | 2.1 | 2.1 |
Return on Assets % | 14.2 | 16.0 | 11.5 | 15.2 | 16.7 |
Financial Leverage (Average) | 1.6 | 1.7 | 2.7 | 2.6 | 2.6 |
Return on Equity % | 23.8 | 26.8 | 24.4 | 40.2 | 43.0 |
Return on Invested Capital % | 23.7 | 22.4 | 16.9 | 25.0 | 30.7 |
Interest Coverage | 303.7 | 19.5 | 22.4 | 35.3 | |
Key Ratios -> Growth | 2010-01 | 2011-01 | 2012-01 | 2013-01 | 2014-01 |
Revenue % | |||||
Year over Year | -2.3 | 3.3 | -0.8 | 7.6 | 3.2 |
3-Year Average | -3.8 | -2.4 | 0.1 | 3.3 | 3.3 |
5-Year Average | -2.7 | -1.8 | -1.8 | -0.1 | 2.1 |
10-Year Average | 2.0 | 0.7 | 0.5 | 0.8 | 0.2 |
Operating Income % | |||||
Year over Year | 17.3 | 8.4 | -26.9 | 35.1 | 10.7 |
3-Year Average | 15.6 | 14.4 | -2.4 | 2.3 | 3.0 |
5-Year Average | -2.7 | 2.4 | 4.1 | 8.1 | 6.8 |
10-Year Average | -0.0 | 3.1 | 15.6 | 6.7 | 1.4 |
Net Income % | |||||
Year over Year | 14.0 | 9.3 | -30.8 | 36.3 | 12.8 |
3-Year Average | 12.3 | 13.1 | -4.9 | 1.0 | 2.1 |
5-Year Average | -0.9 | 1.6 | 1.4 | 6.4 | 5.8 |
10-Year Average | -0.2 | 3.2 | 9.1 | 2.2 | |
EPS % | |||||
Year over Year | 17.9 | 19.0 | -17.0 | 49.4 | 17.6 |
3-Year Average | 19.3 | 21.4 | 5.2 | 13.8 | 13.4 |
5-Year Average | 5.5 | 8.7 | 10.9 | 17.3 | 15.4 |
10-Year Average | 2.3 | 6.5 | 15.7 | 9.7 | |
Key Ratios -> Cash Flow | 2010-01 | 2011-01 | 2012-01 | 2013-01 | 2014-01 |
Cash Flow Ratios | |||||
Operating Cash Flow Growth % YOY | -954 | ||||
Free Cash Flow Growth % YOY | |||||
Cap Ex as a % of Sales | 2.4 | 3.8 | 3.8 | 4.2 | 4.2 |
Free Cash Flow/Sales % | 11.2 | 8.1 | 5.6 | 8.2 | 6.4 |
Free Cash Flow/Net Income | 1.5 | 1.0 | 1.0 | 1.1 | 0.8 |
Key Ratios -> Financial Health | 2010-01 | 2011-01 | 2012-01 | 2013-01 | 2014-01 |
Balance Sheet Items (in %) | |||||
Cash & Short-Term Investments | 32.2 | 23.5 | 25.4 | 20.2 | 19.2 |
Accounts Receivable | 2.9 | 4.0 | 4.4 | 5.9 | |
Inventory | 18.5 | 22.9 | 21.8 | 23.5 | 24.6 |
Other Current Assets | 7.7 | 6.2 | 6.9 | 7.1 | 6.8 |
Total Current Assets | 58.4 | 55.6 | 58.1 | 55.3 | 56.4 |
Net PP&E | 32.9 | 36.3 | 34.0 | 35.1 | 35.1 |
Intangibles | 2.0 | 2.2 | 2.4 | 4.2 | 4.0 |
Other Long-Term Assets | 6.7 | 5.9 | 5.6 | 5.4 | 4.5 |
Total Assets | 100 | 100 | 100 | 100 | 100 |
Accounts Payable | 12.9 | 14.9 | 14.4 | 15.3 | 15.8 |
Short-Term Debt | 0.8 | 0.3 | |||
Taxes Payable | 0.5 | 0.7 | 0.1 | 1.5 | 0.5 |
Accrued Liabilities | 13.3 | 14.1 | 5.3 | 5.3 | 4.7 |
Other Short-Term Liabilities | 8.1 | 9.3 | 9.9 | ||
Total Current Liabilities | 26.7 | 29.7 | 28.7 | 31.4 | 31.2 |
Long-Term Debt | 12.6 | 21.6 | 16.7 | 17.4 | |
Other Long-Term Liabilities | 12.1 | 12.6 | 13.2 | 12.4 | |
Total Liabilities | 38.8 | 42.3 | 62.9 | 61.3 | 61.0 |
Total Stockholders' Equity | 61.3 | 57.8 | 37.1 | 38.7 | 39.0 |
Total Liabilities & Equity | 100 | 100 | 100 | 100 | 100 |
Liquidity/Financial Health | 2010-01 | 2011-01 | 2012-01 | 2013-01 | 2014-01 |
Current Ratio | 2.2 | 1.9 | 2.0 | 1.8 | 1.8 |
Quick Ratio | 1.2 | 0.9 | 1.0 | 0.8 | 0.8 |
Financial Leverage | 1.6 | 1.7 | 2.7 | 2.6 | 2.6 |
Debt/Equity | 0.2 | 0.9 | 0.4 | 0.5 | |
Key Ratios -> Efficiency Ratios | 2010-01 | 2011-01 | 2012-01 | 2013-01 | 2014-01 |
Efficiency | |||||
Days Sales Outstanding | 5.1 | 6.3 | 7.3 | 9.0 | |
Days Inventory | 64.3 | 64.4 | 63.7 | 64.9 | 68.3 |
Payables Period | 43.1 | 43.2 | 41.6 | 42.5 | 44.2 |
Cash Conversion Cycle | 26.3 | 28.3 | 29.7 | 33.0 | |
Receivables Turnover | 71.5 | 58.0 | 49.8 | 40.7 | |
Inventory Turnover | 5.7 | 5.7 | 5.7 | 5.6 | 5.4 |
Fixed Assets Turnover | 5.1 | 5.7 | 5.7 | 6.1 | 6.0 |
Asset Turnover | 1.8 | 2.0 | 2.0 | 2.1 | 2.1 |
GPD Key Stats
Key Statistics | |||||
Data provided by Capital IQ, except where noted. | Trading Information | ||||
Valuation Measures | Stock Price History | ||||
Market Cap (intraday)5: | 17.15B | Beta: | 1.67 | ||
Enterprise Value (Nov 19, 2014)3: | 16.99B | 52-Week Change3: | -4.6% | ||
Trailing P/E (ttm, intraday): | 14.5 | S&P500 52-Week Change3: | 15.2% | ||
Forward P/E (fye Feb 1, 2016)1: | 12.5 | 52-Week High (Sep 4, 2014)3: | 46.9 | ||
PEG Ratio (5 yr expected)1: | 1.1 | 52-Week Low (Oct 16, 2014)3: | 35.5 | ||
Price/Sales (ttm): | 1.1 | 50-Day Moving Average3: | 38.3 | ||
Price/Book (mrq): | 5.8 | 200-Day Moving Average3: | 41.0 | ||
Enterprise Value/Revenue (ttm)3: | 1.0 | Share Statistics | |||
Enterprise Value/EBITDA (ttm)6: | 6.5 | Avg Vol (3 month)3: | 4,823,180 | ||
Financial Highlights | Avg Vol (10 day)3: | 2,984,710 | |||
Fiscal Year | Shares Outstanding5: | 434.86M | |||
Fiscal Year Ends: | 2/1/14 | Float: | 272.72M | ||
Most Recent Quarter (mrq): | 8/2/14 | % Held by Insiders1: | 40.8% | ||
Profitability | % Held by Institutions1: | 56.1% | |||
Profit Margin (ttm): | 7.6% | Shares Short (as of Oct 31, 2014)3: | 8.07M | ||
Operating Margin (ttm): | 12.8% | Short Ratio (as of Oct 31, 2014)3: | 1.2 | ||
Management Effectiveness | Short % of Float (as of Oct 31, 2014)3: | 3.3% | |||
Return on Assets (ttm): | 16.8% | Shares Short (prior month)3: | 7.87M | ||
Return on Equity (ttm): | 38.6% | Dividends & Splits | |||
Income Statement | Forward Annual Dividend Rate4: | 0.88 | |||
Revenue (ttm): | 16.31B | Forward Annual Dividend Yield4: | 2.20% | ||
Revenue Per Share (ttm): | 36.32 | Trailing Annual Dividend Yield3: | 0.86 | ||
Qtrly Revenue Growth (yoy): | 2.9% | Trailing Annual Dividend Yield3: | 2.20% | ||
Gross Profit (ttm): | 6.29B | 5 Year Average Dividend Yield4: | 1.90% | ||
EBITDA (ttm)6: | 2.63B | Payout Ratio4: | 31.0% | ||
Net Income Avl to Common (ttm): | 1.24B | Dividend Date3: | 1/28/15 | ||
Diluted EPS (ttm): | 2.71 | Ex-Dividend Date4: | 1/5/15 | ||
Qtrly Earnings Growth (yoy): | 9.6% | Last Split Factor (new per old)2: | 3:02 | ||
Balance Sheet | Last Split Date3: | 6/22/99 | |||
Total Cash (mrq): | 1.52B | ||||
Total Cash Per Share (mrq): | 3.49 | ||||
Total Debt (mrq): | 1.39B | ||||
Total Debt/Equity (mrq): | 47.28 | ||||
Current Ratio (mrq): | 1.9 | ||||
Book Value Per Share (mrq): | 6.8 | ||||
Cash Flow Statement | |||||
Operating Cash Flow (ttm): | 1.84B | ||||
Levered Free Cash Flow (ttm): | 1.12B | ||||
See Key Statistics Help for definitions of terms used. | |||||
Abbreviation Guide: K = Thousands; M = Millions; B = Billions | |||||
mrq = Most Recent Quarter (as of Aug 2, 2014) | |||||
ttm = Trailing Twelve Months (as of Aug 2, 2014) | |||||
yoy = Year Over Year (as of Aug 2, 2014) | |||||
lfy = Last Fiscal Year (as of Feb 1, 2014) | |||||
fye = Fiscal Year Ending | |||||
1 Data provided by Thomson Reuters | |||||
2 Data provided by EDGAR Online | |||||
3 Data derived from multiple sources or calculated by Yahoo! Finance | |||||
4 Data provided by Morningstar, Inc. | |||||
5 Shares outstanding is taken from the most recently filed quarterly or annual report and Market Cap is calculated using shares outstanding. | |||||
6 EBITDA is calculated by Capital IQ using methodology that may differ from that used by a company in its reporting | |||||
Sheet1
Bonds being traded and reported in Finra's website | ||||||||||
Rating | Outstanding (000) | Coupon | Maturity | Price | YTM | Years to Maturity | Current value (000) | Note to students -- do not use this folder! | ||
Mosaic | 12/4/13 | |||||||||
MOS.GD | BBB | 300 | 4.9% | 11/15/41 | 91.42 | 3.8% | 28.0 | 274 | ||
MOS.GS | BBB | 450 | 3.8% | 11/15/21 | 99.24 | 3.9% | 8.0 | 447 | ||
MOS.406 | BBB | 900 | 4.3% | 11/15/23 | 99.63 | 4.3% | 10.0 | 897 | ||
MOS.40692 | BBB | 500 | 5.5% | 11/15/33 | 101.88 | 5.3% | 20.0 | 509 | ||
MOS.4069206 | BBB | 600 | 5.6% | 11/15/43 | 101.79 | 5.5% | 30.0 | 611 | ||
2,750 | Wt. avg | 4.6% | 2,738 | |||||||
Potash Corp | ||||||||||
POT.GD | A3 | 500 | 5.9% | 12/1/36 | 107.44 | 5.3% | 23.0 | 537 | ||
POT.GE | A3 | 500 | 5.3% | 5/15/14 | 102.03 | 0.7% | 0.4 | 510 | ||
POT.GF | A3 | 500 | 6.5% | 5/15/19 | 120.64 | 2.4% | 5.4 | 603 | ||
POT.GG | A3 | 500 | 3.8% | 9/30/15 | 105.15 | 0.9% | 1.8 | 526 | ||
POT.GH | A3 | 500 | 4.9% | 3/30/20 | 110.35 | 3.1% | 6.3 | 552 | ||
POT.AB | A3 | 500 | 5.6% | 12/1/40 | 106.20 | 5.2% | 27.0 | 531 | ||
POT.AA | A3 | 500 | 3.3% | 12/1/17 | 105.58 | 1.8% | 4.0 | 528 | ||
3,500 | Wt. avg | 2.8% | 3,787 | |||||||
Source Finra.org | ||||||||||