Mod XIII Luke Friedman
Industry Definition • Comprised of companies that sell products through “non-store” channels, including catalogs, online sales, television, and radio • Products and services are delivered through the mail • Companies in this industry typically have low amounts of inventory and commonly act as the “middle-man” in sales transactions
Final Valuation 11:46PM 4/22/2014
Confession • Not even close to linking the 3 • Only worked first time after manipulation • Tried line items as % of Sales—didn’t work • Tried as % of Sales (simple valuation)—didn’t work
Interesting Assumption(s) • Large cash balance Q3paid down debt • Caused change in • Tried to compound bad outlook in early years then minimal growth in following years • Terminal value used 3% because do not expect Barnes & Noble to close
Interpretation&ISSUES • FCF • Potentially higher EPAT if sold Nook segment • NEA increasing too quickly • REI • Far too many assets/not efficient enough • Incorrectly forecasted NEA • AGR • Earnings taken in advance by liquidation of Nooks • WACC adjustment • Underlying “smoothness issue” • Spreadsheet error(s)
Final Valuation 9:04AM 4/23/2014
Conclusion and Q&A • Results • FCF—45% • REI—128% • AGR—108% • Why Adjusted Assumptions • Sole Survivorwill not perpetually liquidate • Demand for hard-cover books • Analyst at a hold—high target at $32 • ???