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Published byBruno Chase Modified over 9 years ago
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DIRECT FOCUS, INC. Consumer Sector Jaci Barrett Arianne Obering Brian Price Mary Whitehouse John Wilson
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SECTOR OVERVIEW
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Current Stock Price Holdings WMT: 58.05 PEP: 52.20 GPS: 14.66 LTD: 19.56
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COMPANY BACKGROUND Established in 1986 Went public in 1999 Direct products: Bowflex and Nautilus Sleep System Retail and Commercial Products: Schwinn, Nautilus, and Stairmaster
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Direct Focus, Inc.
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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%
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SALES GROWTH
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NET INCOME GROWTH
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EARNINGS GROWTH 35.8% in 2002 27.7% in 2003 25.0% in 2004
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Valuation Ratios Price/Book (mrq): 8.89 Price/Earnings (ttm): 20.87 Price/Sales (ttm): 3.72
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PE RATIOS 20.84 present 16.02 times 2002 eps 13.17 times 2003 eps PEG ratio = 0.623 PEG Ratio The PEG ratio is a powerful formula which compares earnings growth and the Price Earnings Ratio
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Price and Volume Recent Price: $43.97 52-Week Low on 21-Sep-2001: $16.80 52-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
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Per-Share Data Book Value (mrq): $4.95 Earnings (ttm): $2.11 Earnings (mrq): $0.67 Sales (ttm): $11.81 Cash (mrq): $1.46
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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
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COMPETITION Brunswick (Life Fitness) Retail Mail Order Industry Sporting Goods Industry
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BETA ANALYSIS 24-Apr DFXI100$42.00$4,200.0012.16%1.660.202 LTD218$18.79$4,096.2211.86%1.440.171 PEP170$52.93$8,998.1026.06%0.70.182 WMT300$57.45$17,235.0049.91%0.940.469 $34,529.32Beta Port.1.024
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RECOMMENDATION USE capital from GPS Sale to Buy Direct Focus Inc. (DFXI) Buy 100 Shares of DFXI Price $42.00 as of today
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