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Where's Liz?

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December 27, 2009 – Comments (2) | RELATED TICKERS: KATE

We were asked yesterday what we thought of apparel maker Liz Claiborne, Inc. (NYSE: LIZ).

Our thoughts are based on the company's most recent Form 10-K filing for fiscal year ending December 31, 2008, as filed with the Securities and Exchange Commission on March 4, 2009.

Short-Term Investment
To us, there is little short-term investment incentive for this stock. With first resistance at $5.32 and a recent close of $5.28, we simply aren't interested in risking $5+ to make $0.04.

Long-Term Investment
We believe that a reasonable value estimate for the stock is in the $6-$7 range, and would add the stock to our portfolio at something less than $2.25.

At issue for us is that company's debt, which at the end of fiscal 2008, was $743 million, more than 6 times EBITDA, and near 1.5 times Net Fixed Assets. While the company did reduce debt during fiscal 2008 by $118 million, management also authorized the payment of $21 million in cash dividends, something, in our opinion, higlights the lack of management's entreprenurial spirit. At the very least, management should have replaced a portion of the $48 million in cash spent on interest payments on the company's debt.

Lastly, we note that for company ended fiscal 2008 with an equity value of ($2.27), tangible book value of $2.65, and shareholder equity of $5.30, none of which makes us fans of the stock at this time.

Wax


For the Liz Claiborne worksheet, please click here. To see what the rest of the CAPS Community has to say, please click here.

 

2 Comments – Post Your Own

#1) On December 27, 2009 at 1:14 PM, Teacherman1 (57.89) wrote:

Good score and good average pick score for so few picks.

Just curious, are you using the "royal we" in your post, or are these picks for a company or group?

We share the same favorite sports team.

I used to live in Houston, but now live in the Austin area.

Do your picks represent your real life holdings, or just picks?

I hope you take these comments as curiosity and not as being nosey.

It is just that you have been around for a very long time, and that is not many picks.

Hope you had a Merry Christmas.

Go Astros. 

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#2) On December 27, 2009 at 2:20 PM, wax (97.05) wrote:

Hi James!

The "we" is really a "we", but it as in a family investment club. I generally come up with the initial research and send it on to the rest of the family members.

They all go through my initial research and if agreeable we will move into more detailed research which sometimes leads to the addition in our investment club portfolio, but not always.

The important thing to remember, is the worksheet is a starting point for your own continued research, not an entry point to add to your portfolio.

And yep, the Lastros continue to suck, but they are still my team!

Thanx for the thoughts....

Wax

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