PSS

Best Idea Collective Brands Beats Estimates, Shares Up Over 20%

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Earlier Collective Brands (PSS), one of our best ideas, reported second-quarter earnings that beat most analysts’ estimates and announced a plan to unlock shareholder value. Sales were up nearly 5% and net of a large goodwill impairment, earnings came in at $0.16 a share. The numbers weren’t the big news. Collective announced that it will pursue “strategic initiatives to unlock shareholder value” which we speculate involves a sale of the company, possibly to a private equity firm, or a spin-off of the successful PLG group. We’ve thought that a sum of the parts evaluation shows the true value of Collective, but we underestimated management’s willingness to deliver, and are very pleasantly surprised. We are maintaining our fair value of $24, … Read more

Adding Collective Brands to Our Best Ideas List

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This article appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/278772-collective-brands-turnaround-candidate-not-value-trap  Collective Brands Looks More Like a Turnaround Than a Value Trap We have initiated coverage of Collective Brands (PSS) at a fair value of $24 per share based on our discounted cash-flow process. The company reported a miserable first quarter, and the stock has languished since, creating an excellent buying opportunity for long-term investors, in our opinion. Legendary investor Peter Lynch made quite a bit of money betting on turnarounds, and we think Collective Brands is the quintessential turnaround candidate. We think the stock is unfairly beaten down, providing considerable upside to patient investors. We are adding the firm to our Best Ideas List. Source: Valuentum Securities Inc.Source: Valuentum Securities Inc. (in millions of … Read more

Big 5 Sporting Goods Looks Extremely Undervalued, But Proceed With Caution

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This article appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/277117-big-5-sporting-goods-looks-extremely-undervalued-but-proceed-with-caution If you read nothing else, consider these 3 points: Big 5 is disproportionately affected by unemployment in its key home states The company continues to grow slowly and conservatively Big 5 finds homes in niche markets that Dick’s (DKS) and The Sports Authority aren’t interested in What Big 5 does Big 5 is a small sporting goods retailer with 396 stores in 12 western states. The vast majority of its shops are concentrated in California and Nevada. They sell shoes, apparel, athletic gear, and accessories. For shoppers in bigger cities, one might find The Sports Authority or Dick’s Sporting Goods, as Big 5’s stores operate on a much smaller scale. The … Read more