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Strategies & Market Trends : Bankruptcy Predictor Model
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To: Razorbak who wrote (99)3/20/1999 3:07:00 PM
From: Mad2   of 477
 
ELBO (NASDAQ, Eletronics Boutique)
Heres a retailer that I've been following trading near it's ipo price of last summer. I'm not in it but find it a interesting stock and may take a position. Couple of notes of interest. They have 42 mil of cash in current assets (rest is inventory), no debit, what appears to be a good web site that they report generated 5,0 mil in sales in past year. This company seems to be similar to EGGS, excepting they lean towards the electonic games, orientated towards youth that like to hang around the malls. Two brokers are covering ELBO both with a strong buy recomendation. While they score high on the Altman indicator, the strength comes from the Sales volume and market valuation. Lastly they may draw a negative with casual lookers as their year over year net income actually dropped as in 1997 they paid little to no taxes using up tax loss carry forwards. However 97 EBIT was 20.5 mil (4.6% of revenue) and 98 EBIT came in at 32.4 mil (5.7 % of revenue) with no debit. While retailing seems to be a bit out of favor in liew of e-commerce this seems to be they type of retailer (niche) that serves the convience buyer with small (strip and larger mall) stores. Interesting to me at this point!
ITEM 2/1/98
Total Sales (2/1/98-1/31/99) 570
Total Assets 172
Retained Earnings 17.7
EBIT 32.4
Market Value Equity (3/19/99) 295.8
Book Value Liabilities 123.2
Current Assets 117.6
Current Liabilities 120.7
Working Capital -3.1
Number Shares 20.4
Share Price (3/19/99) 14.5

Altman bankruptcy Predictor (Z)
Z=(1.2*X1)+(1.4*X2)+(3.3*X3)+(.6*X4)+(1.0*X5)

Working Capital/Total Assets X1 -0.02
Retained Earnings/Total Assets X2 0.10
EBIT/Total Assets X3 0.19
Market Value Equity/Book Value Liabilities X4 2.40
Total Sales/Total Assets X5 3.31
Z=1.2(-.02)+1.4(.2)+3.3(.19)+.6(2.4)+1.0(3.31)
Z= 5.498607671
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