LIZ: Playing Out in Black Book Fashion


Liz is changing exactly what it should be changing -- EVERYTHING. Could not be more spot on with what they need, and our thesis. The valuation profile and investor base will change dramatically here.



Liz is changing exactly what it should be changing -- EVERYTHING. Could not be more spot on with what they need, and our thesis, as we outlined in our Sept. 13th Black Book (LIZ: Get In While You Can). The valuation profile and investor base will change dramatically here.


What the company looked like yesterday – a highly levered (~4x Net Debt-to-EBITDA on 2012 numbers) weak primary brand, inactive management/board, no earnings, and valued largely by hopeful EBITDA numbers and phantom breakup values; to being one that has a much more defendable portfolio that is, by and large - actually growing (or just returning to growth after years of investment) has just had its debt levels decimated to 1.7-1.9x Net Debt/EBITDA on 2012 numbers – virtually eliminating bankruptcy risk. It has one division alone with a growth profile like few others in global retail that accounts for over 50% of the company’s cash flow.


We've heard nothing but silence by most investors as we worked this name as our top idea over  the better part of this year. But now people will start to value it like a viable stand-alone company with earnings power better than a buck within reason.


Slap on a reasonable EBITDA, PE, sales, FCF, or just about any other metric you want, and the stock still looks attractive even after yesterday's 34% run.


LIZ: Playing Out in Black Book Fashion - LIZ LevRatio 10 11



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