Volcom Research Report 3

47 peers 2791 higher elevated earnings growth rates

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: M is expected to have an earnings growth rate that significantly exceeds its peers. Sales Growth discount VLCM 1.67 Peers 1.88 • Discount. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales. • VLCM is trading at a discount to its industry on this measurement. 3 VLCM 16.68 Peers 10.92 • Premium. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures. • VLCM is trading at a significant premium to its peers. discount VLCM 2.15 Peers 3.58 • Discount. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet. • VLCM is trading at a significant discount to its peers. 2 premium discount VLCM 15.98 Peers 17.16 • Average. An average price-to-projected earnings ratio can signify an industry neutral stock price and average future growth expectations. • VLCM is trading at a valuation on par with its peers. Price/Book 1 Price/CashFlow discount 2009 MOST RECENT RATINGS CHANGES Date Price Action 4/30/10 $23.85 Upgrade 6/24/08 $25.78 No Change Price as of 6/24/2010 $19.82 VALUATION BUY. VOLCOM INC's P/E ratio indicates a discount compared to an average of 20.36 for the Textiles, Apparel & Luxury Goods industry and a value on par with the S&P 500 average of 21.06. To use another comparison, its price-to-book ratio of 2.15 indicates valuation on par with the S&P 500 average of 2.02 and a discount versus the industry average of 3.58. The current price-to-sales ratio is above the S&P 500 average, but below the industry average. Upon assessment of these and other key valuation criteria, VOLCOM INC proves to trade at a discount to investment alternatives within the industry. $30 $10 2008 Beta 1.83 1 2 3 lower 4 5 higher VLCM -10.04 Peers 2.88 • Lower. A sales growth rate that trails the industry implies that a company is losing market share. • VLCM significantly trails its peers on the basis of sales growth DISCLAIMER: The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but TheStreet.com Ratings, Inc. can not guarantee its accuracy and completeness, and that of the opinions based thereon. Data is pr...
View Full Document

Ask a homework question - tutors are online