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Staples-Module 3

Staples-Module 3. Mary Astuno. Introduction to Staples. Staples, Inc. and its subsidiaries is the world's leading office products company . Reach customers through contract, on-line, catalog and retail sales channels that are designed to be convenient. Business Segments.

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Staples-Module 3

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  1. Staples-Module 3 Mary Astuno

  2. Introduction to Staples • Staples, Inc. and its subsidiaries is the world's leading office products company. • Reach customers through contract, on-line, catalog and retail sales channels that are designed to be convenient

  3. Business Segments • North American Commercial segment consists of the U.S. and Canadian business units that sell and deliver office products and services directly to businesses, including Staples Advantage and Quill.com. • International Operations segment consists of businesses in 23 countries in Europe, Australia, South America and Asia] • Reported negative NI of $210.7M for FY 2012

  4. NEA Multiple

  5. NEA Multiple analysis • Staples stock closed at $13.52 on January 24, 2014, suggesting that it was undervalued according to this model. • Staples stock closed at $13.51 on February 1, 2013, the day before the 10-K was released to the SEC, suggesting that the stock was again undervalued according to this model. • Amazon had the highest NEA market multiple of 39.14, significantly raising the equity value per share price of Staples stock.

  6. EPAT Multiple

  7. EPAT Multiple Analysis • Staples stock closed at $13.52 on January 24, 2014, suggesting that it was undervalued according to this model. • Staples stock closed at $13.51 on February 1, 2013, the day before the 10-K was released to the SEC, suggesting that the stock was again undervalued according to this model. • Amazon had the highest EPAT market multiple of 768.7, significantly raising the equity value per share price of Staples stock. • Office Depot’s EPAT market multiple was not included in the average market multiple given that it was negative

  8. NI Multiple and CI Multiple • Our team elected to not compute either of these values given that 2 out of the 3 companies had negative values for both, thus inhibiting the ability to compute an average market multiple • Staples and Office Depot had negative CI • Amazon, Staples and United Stationers had negative NI.

  9. BV Multiple

  10. BV Multiple Analysis • Staples stock closed at $13.52 on January 24, 2014, suggesting that it was undervalued according to this model. • Staples stock closed at $13.51 on February 1, 2013, the day before the 10-K was released to the SEC, suggesting that the stock was again undervalued according to this model. • Amazon had the highest BV market multiple of 21.48, significantly raising the equity value per share price of Staples stock.

  11. Sales Multiple

  12. Sales Multiple Analysis • Staples stock closed at $13.52 on January 24, 2014, suggesting that it was undervalued according to this model. • Staples stock closed at $13.51 on February 1, 2013, the day before the 10-K was released to the SEC, suggesting that the stock was again undervalued according to this model. • Amazon had the highest sales market multiple of 2.83, significantly raising the equity value per share price of Staples stock.

  13. Inventory Multiple

  14. Inventory Multiple Analysis • Our team chose an Inventory multiple valuation seeing as our companies are all in the retail industry and have inventories as a significant part of their assets. • Staples stock closed at $13.52 on January 24, 2014, suggesting that it was undervalued according to this model. • Staples stock closed at $13.51 on February 1, 2013, the day before the 10-K was released to the SEC, suggesting that the stock was again undervalued according to this model. • Amazon had the highest inventory market multiple of 28.65, significantly raising the equity value per share price of Staples stock.

  15. Overall Recommendation

  16. Analysis • As one can tell from the prior slide, Staples trading stock price was lower than every single equity value per share computed, suggesting that the stock price is undervalued. • Thus, the overall recommendation would be to buy the Staples stock • The following slides show the buy/sell recommendations of the other three companies

  17. Amazon

  18. United Stationers

  19. Office Depot

  20. Other Retail • As the other 3 companies show, Amazon was the only company that was overvalued. • Amazon’s high market multiples caused Staples’ equity value per share to be high.

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