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Strategies & Market Trends : Value Investing

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To: James Clarke who wrote (19537)	1/7/2005 5:48:23 AM
From: David	Read Replies (1) of 78704

James: Any new thoughts on ANF? More particularly, I am curious about your thoughts on the long term prospects of ANF say over a 10 year horizon. Also, whether you have any views on management's integrity. ANF closed over $50.00 today. Now the price of the company, I believe, is approaching conservative estimates of intrinsic value. (e.g. assume 10 to 12% earnings growth over next 10 years and 5% thereafter in perpetuity discounted at 10% to 15% would indicate an intrinsic value of $55 to $60 per share). I am considering selling covered calls (leaps) to hedge against short term price fluctuations. I anticipate ANF will hit a glitch sometime along the way (say between now and January 2007) and I can buy back the calls. The price of the company seems somewhat set at near perfection and further appreciation depends mainly upon the company's growth strategy, new concept stores, Hollister and Rhuel. Valuation measures per Yahoo: VALUATION MEASURES Market Cap (intraday): 4.37B Enterprise Value (7-Jan-05)³: 3.92B Trailing P/E (ttm, intraday): 23.57 Forward P/E (fye 31-Jan-06)¹: 17.71 PEG Ratio (5 yr expected)¹: 1.11 Price/Sales (ttm): 2.18 Price/Book (mrq): 5.43 Enterprise Value/Revenue (ttm)³: 2.07 Enterprise Value/EBITDA (ttm)³: 9.64 ANF continues trading at around 10 times free cash flow (I am assuming yahoo's EV/EBITDA calculation is correct). There is now approximately $5.09 per share in cash (also per yahoo). Price to Sales Ratio concerns me as does P/B and PEG.

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