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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (47322)	4/4/2012 3:48:59 PM
From: KyrosL	Read Replies (1) \| Respond to of 78751

Cash flow and debt reduction. GAAP earning will be terrible as they get rid of goodwill and close unprofitable stores. They have preannounced almost $4 in charges for 2012.

To: Paul Senior who wrote (47322)	4/4/2012 8:52:52 PM
From: thatsnotluck	Read Replies (1) \| Respond to of 78751

<<What SVU financial numbers scream bargain to you?>> i am with you. after seeing the discussion i took a quick look at the numbers. maybe i pulled the wrong company. i am not seeing enough FCF capacity to make a dent in debt load.

To: Paul Senior who wrote (47322)	4/5/2012 12:53:06 AM
From: Spekulatius	2 Recommendations Respond to of 78751

re SVU - a couple of things. if you look at EV/EBITDA numbers, SVU and SWY are valued about the same (~4.2 EV/EBITDA). SWY has better comps and a better balance sheet , in SVU case the equity slice is much smaller, which provides a lot of leverage. However looking at the enterprise including debt (the way an private equity buyer would do it) both are valued about the same. In SVU and SWY case, the EV does not contain the following very real obligations: 1) lease obligations 2) Pension obligation (~600M$ funding gap) 3) Multi emlpoyer pension funding obligations (~130M$ annually, worth about 1.85B$ at a 7% cap rate) Add it all up, and I get ~ 5.5x EV/EBITDA, which imo is not terrible cheap for a company that is shrinking, has heavy Capex requirements and besieged by stronger competitors. I also want to point out that while SVU total debt load has decreased, that EBITDA has shrunk by almost the same amount than the debt, which means that SVU has just shrunk, not really leveraged. Every once in a while, you can buy good companies for 6x EV/ EBITDA, which imo seems a much better deal than buying a coin toss like situation like SVU at 5.5x, when adjusted for all the implied liabilities.