Bert:
Re: what this stock is really worth:
Doing a quick comparison with Home Depot, the market leader and Eagle's main competition here in Seattle, I would say about $28/share.
Home Depot / Eagle
Market Cap $38.4B / $563.6M
# of Stores 541 / 27
Store Value (Market Cap/#Stores) $71M / $20.87M
Sales/Store $40.85M / $32.97M
Net Income/Store $2.01M / $1.05M
Sorry about the poor formatting -- apparently, what I see isn't what you get! :-)
Assuming each Eagle store is only half as valuable as a HD store (I discount this because of the difference in earnings generated by each store), the Eagle outlets should be worth 27 x $35M = $945M. Eagle has about $128M in debt, so its net worth should be $945M-$128M=$817M. Divide this by the outstanding shares (28.9M), and you get a share value of $28. VectorVest (another data point, although I don't know the details of how they calculate value) says Eagle is worth $29.50 a share, so I don't think my $28 (from a numbers crunching perspective) is too far off base.
Given that Eagle is trading around $19 and HD is around $55, there are some other interesting comparisons. Although earnings for both are growing at around 23% (from this year to next year -- unfortunately, I haven't been able to find any out-year estimates), Eagle has a PE of about 19, while HD's is about 37 -- twice as much! Additionally, Eagle has a higher book value and greater cash and sales per share.
From a shopper's perspective, I think Eagle is by far the superior store. The selection is better, the prices are as good or better (guaranteed), the personnel are better trained, and the stores themselves are more customer friendly -- no forklifts on the floor during store hours, not a "warehouse" environment.
The company is a winner, IMO, and it's just a matter of time before the stock price reflects underlying value. Of course, the answer I don't have is when that will be!
Lisa |
