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Tommy Hilfiger Corp. (TOM) Message Board

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  • canel5 canel5 Dec 20, 2002 5:42 AM Flag

    intrinsic value is $8,35

    I calculate liquidation value as follows ;

    Cash & Equivalents 392 x 1.00 = 392
    Total Receivable 196 x 0,70 = 137
    Total Inventory 270 x 0,50 = 135
    Other Current Assets 90 x 0,70 = 63
    Property/Plant/Equip 303 x 0,20 = 61
    Other Long Term Assets 10 x 0,70 = 7
    ---------------------
    Total Assets at liquidation = 795
    All Liabilities = 1092
    ---------------------
    Net Asset Value after lqdton = - 297
    Shares Outstanding = 90.58
    Per Share liquidation value = -3.27

    I take next year eps est. 1,24
    I take 10 year growth rate 10 %
    I take discount rate 10% (conservative)
    Future Value of TOM = 11.62
    Per Share liquidation value = -3.27
    Intrinsic Value of TOM = 8.35
    Margin of Safety 8.35 x 0.5 = 4.17

    GeneraLLy I take MOS 0.66 like Graham but on this market envoirement why not wait for a while more.

    P.S : Sorry for my broken english as I am Turkish and live in Istanbul

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    • How about something more real like take a multiple of market cap to tangible book value and market cap to sales for comparable public companies like Polo Ralph Lauren and American Eagle Outfitters. Multiple to tangible book should then be 2 to 3 and multiple to sales between .65 and .95 would make TOM worth 2 to 3 times current prices.

      • 1 Reply to johnv60
      • The financial ratios look very healthy, this company is definitely not going to go bankrupt! PE comparison against its peers also look promising. I think this stock is very cheap. Investors are doing panic selling due to uncertainties, and partly maybe due to tax loss selling. TOM has been either meeting or exceeding earning estimates so far.

        There is no bad news that can explain the current price. I think it is overreaction on economic news, December anomaly, and weekend anomaly. Revenue from the 37 stores slated for closing amounted to only $7.7 million last quarter (generated operating losses of $4.0 million). It sounds like a good news to me that they will be closed. I think they are operating 160-172 stores this year anyway. Tommy might also benefit from the increase in sales in mall in specialty stores and apparel sales. Weakening of USD against Euro means that revenue from the EU stores, translated to USD, is likely to increase. If we give it a low PE of 8, at the current earning, it should trade at about $11 per share, and if you are generous to give it a PE of 15 you can calculate this yourself. I don't think this stock will stay cheap for too long.

        Good luck.