Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (1) | Ignore Thread Prev | Next
Author: kcanant Three stars, 500 posts Old School Fool CAPS All Star Most Active, Foolanthropy 2013 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 56  
Subject: I GUESS? SO Date: 8/11/2011 9:40 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 1
This is a long post discussing my current thought about GES.
If you don't want to slog through, my conclusion is:
I AM COMPELLED TO BUY GES at the current price.
I am not directly addressing the business, which I feel is doing well.

Back in March I my opinion about GES was wary after they posted earnings with a beat on revs and earnings,
but decreased SSS, increased cotton prices and guidance on the low side (I was not compelled to buy GES):

I believe that comparing the P/E of GES now to the P/E of GES in the past may have some utility when trying to compare value points.
I do not believe that it is useful to compare the P/E of GES to that of a different business.


Here are some points of reference.
June 2010 kcanant purchase $32.86 P/E 11.7
Dec 2010 ($2 special div) $48 P/E 16.4
(16 March 2011) after hours $41.50 P/E 14
Thinking about value points (in terms of P/E), this was my conlusion:

So, where do I want to "anchor" (if I can't avoid anchoring, I'd like to be at least concious of it).
My original P/E purchase @ 11.7 may be unrealistically low. A P/E of 14 may be a reasonable starting point when making my decision.
_______________________________________________________________

Since then, there's been more news.

#1 Cotton prices:
On March 7, cotton futures were $53.44
Since,they've come down nicely. $28.42

#2 A Quarterly Report from GES:
On May 25 GES reported earnings. My take was:
So, how did this quarter look?
Beat on revs...Good
Beat on earnings...Good
Same Store Sales: Down 3.1%...ACK!
YOY Operating margin: Down from 13.2% to 12%...ACK!
(cotton futures are down nicely from $48.04 to 39.54)
They guide to better margins...(BUT, does guidance=perfomance?) Meh
I don't know about the inventory situation yet..


My conclusion: It's a reasonable bet that an opinion that uses the word "ACK" isn't going to be entirely favorable.
Based on what I know so far, I am not compelled to buy more GES at this time. This was a decent quarter on
Revs and Earnings, though the decreased SSS and decreased margins give me pause. Am I a buyer at todays price?
Guess not. In fact, I was wary, and sold the next day @ 44.80.

#3 the price of GES has come down


__________________________________________________________
__________________________________________________________
So what am I doing about this?
I thought that my anchoring to a P/E of 14 represented a reasonable value point, and that waiting for a P/E of 10.7 to 11.7 might be hoping for too much.
Today GES is selling for $34.60
Right now the P/E is down to 11.42
The dividend yield is up to 2.4%

I am back in GES. I purchased some on the 8th @ $31.89 and today
@ $32.86.
I don't make a habit of jumping in and out of positions like this,
but <excuses> I haven't been with GES long enough to have established a trading position and I was fairly antsy this past Spring
and sold some postitions to ensure a nice cash balance in case things went awry this summer.</excuses>
I am indebted to TheMotleyFool for the concepts of buying at "value points" and acquiring "trading postions", as well as for the virtue of patience .

cheers,
kcanant
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (1) | Ignore Thread Prev | Next

Announcements

Foolanthropy 2014!
By working with young, first-time moms, Nurse-Family Partnership is able to truly change lives – for generations to come.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Macro Economics

Looking at Currency Ratios
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement