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Hanover Direct, Inc. (HNV) Message Board

  • phantomflyr phantomflyr Jan 3, 2004 9:59 AM Flag

    Valuation

    Today the enterprise value of HNV is $129 million--$56 million preferred--$25 million congress(post 4q inventory drawdown)$48 million market cap (220million shares)--Low end value of 1/2 sales is (flat 4q) $215 million - $129 = $86 million or $.40 a share--$.62 a share minimum value--more likely is 1/2 + sales for assets or $50 million--and minimum of 80% sales for company store or $256 million= $306 million-$129 million=$177 million= $.80 or $1.02 a share. So why is a company that is worth between $.60 and $1.00 a share stuck at $.22 --?????

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    • One final thought on value--in june the company made a dfinitive offer to buy the preferred for $45 million --close in two months--Which means they had to be getting at least $45 milion for the assets even if Congress waived the payment clause to them. Things are better now and one would expect that $45 million was not a major strecth-- Just getting the $45 million for assets still gives min of $.60 ashare.

    • Phantom
      Also another number that jumps out at me is the income tax expense of 11 mill for Q3.That and the 5 mill for interest expense account for the whole 16 mill loss for the quarter . Do you know what those two numbers will be in Q4 ?
      Thanks Mike

      • 1 Reply to maggymay7
      • The interest expense and tax were one time charges--Tax was a reversal of loss carry forward estimate as the company reduce its anticipated earnings outlook --Interest expense was due to accounting change that required the Preferred Interest be taken in to the bottom income line as opposed of being seperate. Neither are in effect for 4 Q. I think 4 Q will be replete with one of a kind write downs in anticipation of restructuring from the asset sale and possible settlement of litigation. However operating cash flow should yield up to $8 million in EBITDA--Interest going forward will be minimal as the new Preferred is non interest bearing until 06--Also there could possibly be some very large positive income adjustments due to the preferred buyback. All and all the financial health of the company is sound--I suspect internet growth will be big and most in the Company store business.What people have to understand is the books are profitable at the book level and biggest drain on Income is at the Corporate level-Salarys of top level (not needed for company store only) are close to 2 million + other cost that detract from the profitability. You can't value this company on reported numbers as the don't reflect the underlying strength of the CS.

    • Phantom
      How does the restructuring of the debt impact the interest expense line on the operating income or loss statement ? Also assuming no asset sale in the foreseeable future and internet sales growing by 25 per cent and catalog sales flat,what is your best guess estimate, for the 4th quarter ,for net i
      ncome or loss applicable for common shares ?
      Thanks, Mike

    • Donno.
      But thanks for the analysis.

    • Good question.
      The question to me is why doesn't the market , given the numbers you just stated, get it up even close to that.
      There is clearly something the market knows that we don't.
      Now that is true of just about every stock, but in the case of HNV it seems to be on a larger scale.
      This stock has been down for a very long time for a reason
      To me, the only way HNV's stock reaches full value is 1-they sell the co. 2-the daytraders get a hold of it on any news and run it up.
      I think both those thing in the near term are long shots.
      What I think will happen is a small pop on asset sale news and then a dormant stock until maybe a rev. split.
      Then, who knows but it looks like a long hard road.
      They should just sell.

      • 1 Reply to hnvmaniac2000
      • Although I believe the company will be sold as that is the only way to achieve full value from a company that is 75% owned by insiders-- the other thought is if they are able to keep the fulfilment of the sold assets and build both big growth rate into Company Store while building the fulfilment business--That gets very complicated for selling the company as the fulfilment piece from the sold assets would be able to leave after some finite period making it dificult to value the company. Coming up on 2 months which means should here something soon about definitive agreements with closing and adjustments after audits.

 

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