Company Advantages: The culture of the company is its greatest advantage. The customers that shop with Qurate are loyal. Amazon primarily owns web shopping, but it does lack the experience of shopping in person. I would say Qurate is a blend between physical and web-based shopping. With Qurate offering multiple platforms to shop on, it allows users to conveniently use the platform whenever. It’s also good to see the company adapt to the future. Although I am personally not a user, I hear raving reviews form their loyal customer base. The biggest issue with web shopping is the lack of human connection, Qurate changes that with its users.
Disadvantages: Although this company is unique, it still operates in an extremely competitive industry. Amazon has consumed a large portion of the available revenue and will continue to do so. With that said, I would classify Amazon and Qurate in different parts of the retail industry. Two things that worry me when it comes to this company is whether they can handle the debt that have acquired and whether the company will attract more customers to keep their revenue steady. With the competitiveness of this industry the company will have to continue to be innovative and find ways to connect to younger generations.
Valuation and Current State: At the time of writing this summary the enterprise multiple is 6.07. This is one of the reasons this company showed up when I did a value screen. When looking at other valuation measures such as P/E, P/Cash Flow, P/B, and enterprise multiple, the company is lower than its five year average and the industry average. If the company were to revert back to its mean, attractive returns would occur. When doing a conservative DCF I also arrive at attractive returns. This past year the company announced it would start buying back stock. With value stocks this is definitely a plus. When looking at the debt/equity ratio, it’s around 2. This is not ideal but with the amount of FCF the company creates it shouldn’t have a problem paying off the debt. Overall, I think this stock is undervalued.
Final Thoughts: I think the stocks discounted price is due to the lack of interest in companies like this, along with the debt this company has acquired. The biggest concern would be regarding the company being able to maintain the revenue, that’s where you’d be taking a bet. If there were a large decrease in revenue, you would be in trouble. But, the currentcash flow supports its ability to handle the debt. However, I personally like companies that are unappreciated like this; with the valuation I see, I like this investment.
Links:
https://www.morningstar.com/stocks/xnas/qrtea/quote
https://finance.yahoo.com/quote/QRTEA?p=QRTEA&.tsrc=fin-srch
https://www.qurateretailgroup.com
https://simplywall.st/stocks/us/retail/nasdaq-qrte.a/qurate-retail/news/we-think-qurate-retail-nasdaqqrte-a-is-taking-some-risk-with-its-debt
https://www.youtube.com/watch?v=4FZtdnTzAcI
No comments:
Post a Comment