Apparently any new investors feel little to no growth and a limited new product line without acquisition
really doesn't offer much reason to buy shares
"posted inappropriate information", "posting of confidential or false information", "slander individuals and attack corporate strategies", "If someone does this, then they should be held accountable for their actions."
Weird thinking process you have, or are you deliberately mixing it up? Lumping slander in with attacking corporate strategies is an Ashcroft type leap. And what is inappropriate information? Pretty vague standards. In fact, they remind me of Franz Kafka's "The Trial".
The new buzzword is "transparency". Frankly, I think a company suing posters on a message board is kind of silly and it opens a real can of worms, not the least of which is possible incredibly horrible publicity if it gets out. And, if they are contesting a particular statement that is negative, they damn well better be squeaky clean and the statement being contested damn well better be a false statement of "fact", not an opinion.
Lawsuits have a way of boomeranging in unpredictable ways, especially when it involves a "free speach" issue.
My take? Lawsuits are a bad idea and usually a waste of time and money.
"I have been told that West Marine has sued over 10 people that have posted on finance boards."
Begs the question: Who told you?
I've found this mantra of comparable store sales somewhat confusing at best since they haven't changed the guidance about the bottom line. There should be some level of clarity come this month. Percentages sound impressive, but if your selection criteria is less than global, it is quite meaningless.
I think the inventory turn is a critical issue as is the matter of its true liquidating value. Given the small float, a valuation adjustment to inventory for whatever reason could dramatically impact earnings. A simple 1% adjustment could knock 3 million off the bottomline.
So, IMHO, all this talk about revenues without talking about net income, is really quite silly. It makes for good press releases, but not much else, especially if it is tied to "special sales promotions" which by definition mean big discounts.
But, even with that said, this company is being grossly overvalued by the market for the moment. When you discount the growth by the CPI, it is a mature slow growth company. As long as its inventories are worth what they are being carried on the books, it looks like a solid investment, but at $14 a share, not $31. With that said, I would not be surprised to see it go higher yet. But it won't be on the basis of its merits.
If I were part of the managment, I would be flattered by the price run up. But, I would suspect that even they have to be wandering around in dazed amazement given what they paid for Boat US, and Boat US was losing money according to the financials in the 8k filed in March of 2003.
If a really sophisticated short like Chanos (sp) gets a wiff of this company and cuts lose, kattie bar the door. What are we at now? 18x ebitda? 30x eps not counting dilution by all the options now above water? Who says housing is the only thing overvalued?
Just hanging around watching the insiders unload more shares on option exercises. Also keeping an eye on the diminishing sales per store, rising inventories per store and diminished inventory turn rate. Do the math and tell me what you think. Better yet, tell me how you think these are good indicators.
The question is to what extent the promotional sales involved deep price cuts. Just have to wait to see wheither sales were being driven by a Kmart mentality. Reciting an increase in same store sales is a pretty vague measure standing alone IMHO. Still waiting for some more meaningful numbers.
I'm just making observations based on the published information. And, I think it is silly to put a value on this company that is double the worth based on the prices paid for the BOAT whatever its name is. But, in all fairness to the management, they are not the ones driving up the price of the stock and they were selling at $22 and below. I'd have to say they are probably the most suprised by the present pricing.
So, you can look at it three ways: (1) they got a hell of a bargain buy on the 60+ outlets they bought or (2) they paid fair value for what they got or (3) they overpaid to improve market position. I am of the opinion that they paid fair value; not too little and not too much. But when you apply the same pricing formula to the company, you get a price south of $19 which is the price where the insiders started unloading shares. Given that we are all driven by greed, why would anyone sell something at a price lower than what they thought is was worth? It's not like they are insitutional investors spending other peoples' money. So I have to tip my hat to the managment. If I were in their shoes, I would have done the same thing. It's a no brainer. In that regard, you have to appreciate the management. They are a smart bunch and that bodes well for the company in the long term regardless of price fluxuations in stock price.
The company sued the poster on the basis that he or she posted information that could only be known by someone on the inside. But, then again, that is a pretty broad sword since it puts the poster on the defensive.
However, the numbers speak for themselves as do the filings. As I have always said, this is a good company with a nice market niche. But, it is overvalued at this price in my humble opinion based, in part, on my analysis of the acquistion of Boats USA formula. You just have to work the numbers.
I'll sit back and see if the Boats USA acquistion adds anything to the bottom line. This coming quarter should be a good indicator of whether there is any real upside. IMHO, the pe ratio is way too high given what I see is a limited growth potential.
That is just the way I see it. My opinion only.
Maybe all this run up is based on the belief that rich people own boats and will be spending their Bush generated tax savings on boats. It is my understanding that the Walton family aka Walmart is saving about $108,000,000 in taxes due to the reduction in the dividend tax. I wonder how many of the Waltons are fighting in Irag?
$35? Well, with a 3 or 4 year horizon I suppose anything is possible. But, for the moment, I think it is a $15 stock trading at $25 for the reasons stated. If you stand back from the forest and look at the trees, it is easy to understand this business. There is not much to it. In simple terms you have 332 stores that generate about 660,000,000 in revenues or about 2 million per store. Dividing the net income after tax (Approximately 20 million) by the number of stores 332 = a per store profit of about $60,000 per store. So the question on the micro level is, "What is a business that nets $60,000 a year worth?" Take that figure and multipy it by 332. then divide by the number of shares and you get the value per share. So, ignoring the larger corporation aspect, what do you think a business would sell for that netted $60,000? Probably the price WMAR paid on a per store basis of $241,000 which is about 4x net plus the cost of the inventory. Go ask a business broker or just look up business opportunities and see what values are attached to businesses. Whether it is boat supplies, hardware, building supplies, etc., there is a formula and that formula is driven by risk/reward analysis.
So I like to stick to the fundamentals. Investors put unrealistic prices on stocks because they don't know how to evaluate the core components. That is what makes Warren Buffet such a good investor: his understanding the core value of things he buys. I doubt seriously that Berkshire would pay more than $13 a share for WMAR. But that is moot, because they wouldn't even consider it since it has little upside as evidenced by the fact that same store net sales are down for the year.
But, the one good thing about the company is that it isn't buried in debt so I see it as a relatively safe, albiet overpriced company at the moment. The big risk is that your $25 dollar stock could be a $15 stock if anyone knew how to count. That pretty much excludes stock analysts, but favors the shorts until a balance is reached.
This is my "back of the envelope" analysis, I think a good way to measure its value to some extent is to examine the details of their acquistion of Boat USA. They basically bought 62 stores for 72 million of which 57 million was inventory. At any rate, they probably overpaid a bit as it consolidated their dominant position, but if you do the math it works out to an inventory purchase and goodwill. The purchase price was 72 million, inventory was 57 million and 15 million was allocated to goodwill. The assumed debt was offset by other acquired assets. So, if you apply the same logic to WMAR, it is worth the value of its inventory divided by the number of shares outstanding: 288,000,000/ 20,100,000 = 14.32 plus 241,000 (15,000,000/62) x the number of facilites for goodwill (using the Boat US formula): 257 pre-existing locations(per the yahoo profile)+ the 62 boat USA units purchased this year = new total of 319 (I think they added 13 more stores since they indicate the total at 332)= 76,000,000(241,000x319)/20,100,000 =3.80 (or $3.98 if you multiply by 332) which equates to 18.30 or 18.20 per share depending on the number of locations. But, you have to deduct the amount of debt in excess of other assets which is about $100,000,000 which knocks off $5 to bring you to a value of $13.30 or $13.20. However, this assumes the inventory is worth what it is being carried on the balance sheet.
Therefore, using as a benchmark for valuation the Boat US acquition (I noticed that the filings didn't contain the financial statements of Boat US, but just about everything else) you can get a bead on the approximate true market value in the real world as measured by what management negotiated. But, it also shows why there is a lot of insider selling north of $19 a share. With that said, I still think this is a $15 fair value stock to allow for possible advantages it has.
So, unless I am terribly wrong, this stock should drift back to $15 which makes it a good short. But, since I could be wrong, I would like to get some other view points.
I would have to agree on the overvalued aspect, but just about every stock is overvalued. Seems to me the p/e ratio is out of wack with reality for this type of company as is the price as a multiple of either ebitda or cashflow. With same store net sales down year over year (ignoring the acquistion), it seems it is not in a growth mode except by acquistion. But when you look at some of the absurd p/e ratios, this probably looks like a bargain on a relative basis. I think low interest rates have lulled people into not grasping what low interest rates truely imply.
As for the October, November weather, I am not so sure it was that great to keep the boats in the water and was surprised that comparable net sales for October and November would be better than last year given that I consider boating season over once Labor Day passes and certainly after day light savings kicks in. But, what do I know?
BTW, I have a small short position at this time, but not interested in adding to it until it shows signs of peaking. Despite what the media pundits say, I think we are witnessing a sucker rally that will collapse in the 1st quarter of 2004. I just don't buy into the statistics being pumped out or the ability of the economy to sustain a recovery absent handing out money to people. It is a real mess IMHO. I'll go out on a limb and state that I think the holiday sales are not going to be all that great and this "feel good" rally will fade this week as the numbers start coming in.
P.S. I also think that the insider selling is a clear indication that this company has reached its zenith. And I don't blame them one bit. If I could sell something worth $15 to someone for $20 or more, why not? If management thinks $19 or anything north is a good exit point, why shouldn't someone short? It's not like they will be buying back at $27. Count the number of buys in the last two years and at what price. That tells the story. There is an old saying, "Sell anything for a price greater than what you would pay for it."
That seems to be the logical conclusion, yet overall, net sales are down (ignoring Boat US) year to year and yet net sales are improving in what I would consider to be the slower season, i.e. October, November (and presumeably December). Doesn't make sense to me. But, obviously some are pleased with it.
Comparable store net sales for the four weeks ended November 22, 2003 increased 4.5% from the same period a year ago.
Comparable store net sales for the latest forty-seven weeks decreased 2.8% compared to the same period a year ago.
Comparable store net sales for the four weeks ended October 25, 2003 increased 2.3% from the same period a year ago.
Comparable store net sales for the latest forty-three weeks decreased 3.2% compared to the same period a year ago.
Our estimate for a fourth quarter loss remains in the range of ($0.11) to ($0.09) per share, versus last year's loss of ($0.07) per share.
These were lifted from the latest press releases.
Why would same store sales be up after the boating season is over? BTW, how do they measure same store sales anyway? Why would there be projected a greater loss if same store net sales are a net positive? Seems a little odd.
This is a better link
Makes things much clearer on the insider position. But Yahoo gives you the option exercises.
Oh. FYI, here is the link to what I am talking about. I don't think it is all that current and you might try some other information sources.
Try to find some buys in that list that weren't option exercises.