#1
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Stock Of The Day 6/25 LTD - Limited Brands
I'll start on a simple premise. How many chicks do you know who shop at Victoria's Secret?
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#2
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Re: Stock Of The Day 6/25 LTD - Limited Brands
As much as I like the idea of telling girls that I'm a part owner of Victoria's Secret... I don't really like this pick. The biggest thing that peaks my interest is the relatively high level of insider ownership at 13% and especially the insider buying taking place in May.
Then I look at their balance sheet and see a lot of long-term debt along with very mediocre earnings growth, margins, and returns on equity relative to the rest of the industry. I think there are other companies within this industry that have better prospects. |
#3
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Re: Stock Of The Day 6/25 LTD - Limited Brands
I see a company that owns too many brands, some of which have to be muddying up that balance sheet. They have a CEO who's willing to let go, as he did with Abercrombie. I like the company because it is so unexciting. They're still making money, they are IMO a little undervalued because they haven't done anything lately, they are proven winners in the retail game, and I think they'll come up with something sooner or later.
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#4
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Re: Stock Of The Day 6/25 LTD - Limited Brands
James, how do their inventory ratios look?
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#5
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Re: Stock Of The Day 6/25 LTD - Limited Brands
Don't know.
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#6
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Re: Stock Of The Day 6/25 LTD - Limited Brands
For what it's worth, their inventory ratios look better than ever. Using the info from Yahoo Finance...
Jan-05 Quarter end Inventory Turoverover = Cost of Goods Sold / Average Inventory = 1.78 Inventory Period = 365 / Invetnory Turnover = 205 Oct-04 Quarter 0.82 446 Jul-04 Quarter 1.26 290 May-04 Quarter 1.30 281 |
#7
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Re: Stock Of The Day 6/25 LTD - Limited Brands
They don't look all that great to me. FCFY of about 1.5% in 05, 10% in 04, and (7.9%) in 03. Fairly low EPM as well.
Anybody have any comps handy for the industry? |
#8
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Re: Stock Of The Day 6/25 LTD - Limited Brands
Are you sure those numbers are right? If you're figuring quarterly turnover, why use a full year as your inventory period? I would think 91 would be the period, but I honestly don't know.
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#9
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Re: Stock Of The Day 6/25 LTD - Limited Brands
The numbers are right as far as Yahoo Finance accurately captures the numbers from LTD's SEC filings. I know for a fact, though, that Yahoo Finance doesn't always do this correctly. If you do the math yourself, please double check my figures and let me know of any mistakes.
You're right, I made a mistake with the inventory period. If we're talking about quarters as I did, we need to use 91 for the numerator in calculating the turnover. Or we could switch entirely to annual figures. |
#10
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Re: Stock Of The Day 6/25 LTD - Limited Brands
I didn't doubt your finacncial figures, just the numerator. I just thought that that was entirely too high of a quarterly turnover, but's it's still good.
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