At $23.50, PETS is undervalued and we recommend a BUY. A combination of short-term guidance misfires and PetSmart’s acquisition of Chewy has caused market-wide panic, float short % to skyrocket, and PETS’ market cap to halve over the past 9 months. A price correction was deserved but the market has overreacted. PETS’ price-implied-expectations (discussed later in detail) indicate a contraction in sales growth and margins that defy rationality.
At $1,692, Booking Holdings is undervalued and a BUY. The company is expected to continue being a significant participant in the growth of online gross bookings. Building on an extensive network and a unique business model, BKNG is likely to grow revenue between 9-11% over the next 10 years, maintaining a 35% EBIT margin. Given its uncertainty profile, a 25% margin-of-safety is recommended.
At $27.71, L Brands, Inc. (LB) is fairly priced and a NO-BUY. Victoria’s Secret, LB’s flagship retail brand, is past its prime. LB’s body-care retail segment, Bath & Body Works, will maintain its high profitability and will grow at the same rate as the industry.
Leejam Sports Company is a Saudi joint stock company established in the Kingdom of Saudi Arabia. The Company operates the largest network of fitness centres in the Middle East and North Africa region under the Fitness Time brand with 112 operational fitness centres in 23 cities in the Kingdom and three cities in UAE. Additionally, 31 fitness centres are under development as of 31 December 2017.
Multiple scenarios under Price-implied-Expectations analysis show that COO is overvalued today and would make an unattractive investment. We recommend a NO BUY.
At AED 4.13, ARMX is fairly priced and we recommend a NO-BUY. Even upon assuming a 9% y-o-y growth in revenues for the next five years, this is an unremarkable albeit well-run business and we would not recommend buying unless a significant mispricing occurs.
We have come a long way with Hibbett Sports HIBB since Jan 2016 ($30). My initial thesis asserted an intrinsic value of $43 - stressing on a over-reaction to short-term pessimism about the retail industry. I put great faith in HIBB's operational excellence, its superior ROIC track record, and its clustering small-box store expansion strategy. Most worryingly, I pegged Dick's Sporting Goods DKS as HIBB's most formidable threat and gave only a passing mention to Amazon, Inc AMZN.
Exponent is a science and engineering consulting firm that provides solutions to complex problems. What began in 1967 as a failure analysis company now has services including analysis of product development, product recall, regulatory compliance, and the discovery of potential problems related to products, people, property and impending litigation. Exponent currently operates 19 practices under two segments, ‘Engineering and Other Scientific’ and ‘Environmental and Health.’
Thesis: HIBB’s glory days are over. Despite the cutthroat nature of retail, HIBB managed impressive performance on the merit of a sound location strategy and airtight operations. HIBB’s small-box-in-small-town strategy managed to expand ROICs from 14% to 21% from ’08 to ’15. But the lack of a durable moat, the secular e-commerce shift, and an ongoing retail crisis have initiated the beginning of Hibbett’s slow-decline. Despite this, several weak quarters and guidance shortfalls have led Mr. Market to overstate the bad news.
New Oriental is the largest provider of a wide range of private educational services in China, holding 2% of the market share. It operates through seven segments: Language Training and Test Preparation; Primary and Secondary School Education; Online Education; Content Development and Distribution; Pre-School Education; Overseas Study Consulting Services; and Study Tours.