Select Comfort Update Friday, June 22, 2007
Posted by ei-forum in US Traded Stocks.trackback
Since our recent post, the stock price has actually gone down almost 4%.
Has anything fundamental changed with SCSS? Not really, we still feel that the main issue is the President and CEO, Mr. Bill McLaughlin.
Just a small recap of some of the key figures:
- Price is very close to a all time low valuation (P/E of 19 and Forward P/E of 16.2).
- Company has no long-term debt to speak of.
- 5 year ROA 21.33% vs. 4.24% industry average.
- 5 year Net Margin 7% vs. 3.99% industry average.
- 3 year Revenue Growth 20.7% vs. 9.71% industry average.
- 10% Pre Tax Earnings Yield.
- Large percentage of shares are owned by insiders.
As per our first post, we understand that SCSS is facing some issues (management focus, marketing, etc..) but at recent levels, a true value investor should definitely take a very close at this company.
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What do you think a “very close look” would reveal?
That the situation does not justify the current share price:
Balance Sheet – http://finance.yahoo.com/q/bs?s=SCSS
Analysts – http://finance.yahoo.com/q/ao?s=SCSS
P/E Ratio – among lowest in sector
P/B – among lowest in sector
No long-term debt
Some things may be wrong but we think that the discount is at least 16%.