DIRECT FOCUS, INC. Consumer Sector Jaci Barrett Arianne Obering Brian Price Mary Whitehouse John Wilson.

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Presentation transcript:

DIRECT FOCUS, INC. Consumer Sector Jaci Barrett Arianne Obering Brian Price Mary Whitehouse John Wilson

SECTOR OVERVIEW

Current Stock Price Holdings WMT: PEP: GPS: LTD: 19.56

COMPANY BACKGROUND Established in 1986 Went public in 1999 Direct products: Bowflex and Nautilus Sleep System Retail and Commercial Products: Schwinn, Nautilus, and Stairmaster

Direct Focus, Inc.

Income Statements & Profitability Sales (ttm): $424.9M EBITDA (ttm): $115.8M Income available to common (ttm): $75.8M Profit Margin (ttm): 17.8% Operating Margin (ttm): 27.3%

SALES GROWTH

NET INCOME GROWTH

EARNINGS GROWTH 35.8% in % in % in 2004

Valuation Ratios Price/Book (mrq): 8.89 Price/Earnings (ttm): Price/Sales (ttm): 3.72

PE RATIOS present times 2002 eps times 2003 eps PEG ratio = PEG Ratio The PEG ratio is a powerful formula which compares earnings growth and the Price Earnings Ratio

Price and Volume Recent Price: $ Week Low on 21-Sep-2001: $ Week High on 19-Apr-2002: $44.75 Beta: 1.66 Daily Volume (3-month avg): 922.6K Daily Volume (10-day avg):1.36M

Per-Share Data Book Value (mrq): $4.95 Earnings (ttm): $2.11 Earnings (mrq): $0.67 Sales (ttm): $11.81 Cash (mrq): $1.46

PROS/CONS High profit margins High ROE Strong Brands High growth prospects Large run-up in price recently due to higher than expected earnings…recently hit new 52 week high Management aversion to debt financing

COMPETITION Brunswick (Life Fitness) Retail Mail Order Industry Sporting Goods Industry

BETA ANALYSIS 24-Apr DFXI100$42.00$4, % LTD218$18.79$4, % PEP170$52.93$8, % WMT300$57.45$17, % $34,529.32Beta Port.1.024

RECOMMENDATION USE capital from GPS Sale to Buy Direct Focus Inc. (DFXI) Buy 100 Shares of DFXI Price $42.00 as of today