Arden Group, Inc. (NASDAQ:ARDNA)

CAPS Rating: 5 out of 5

A holding company that owns certain real estate properties through its indirect wholly-owned subsidiary, Mayfair Realty, Inc.


Player Avatar TMFPencils (99.81) Submitted: 11/12/2007 7:52:58 PM : Outperform Start Price: $103.44 ARDNA Score: -26.83

Through its subsidiaries Arden-Mayfair and Gelson's Markets, operates 18 higher-end supermarkets in Southern California. The company also owns some real estate properties through its subsidiary, Mayfair Realty.

Reasons to be interested:

1. Company has been growing earnings at a very quick pace lately (in most recent quarter earnings grew 57%), yet the stock has a P/E of approximately 15.

2. Cash flow production is consistent and increasing and is fueling the business's growth. With this cash flow production the balance sheet has grown to $74.31 million in cash with only $1.27 million in cash. The company has been able to pay a consistent dividend every quarter since 2003 as well.

3. Despite the company's superb financial growth and strong fundamentals, no analysts follow the stock. Wall Street doesn't know who the Arden Group is! This has kept the stock down at what are very attractive levels.

Main risk:

1. As with pretty much all grocery stores, Arden faces plenty of competition, although the company does have stronger margins than most competitors.

Member Avatar tharptx (43.13) Submitted: 6/3/2008 2:56:04 PM
Recs: 1

Saw your pitch quoted in this TMF article: I agree with you that the cash flow is strong and improving, the primary driver for earnings growth seems to be reduced R&D investments, not a reduction in general costs or, better yet, top line sales growth. If the cash flow wasn't showing so much improvement I might be tempted to rate this "underperform" - but for now I think I'll sit on the sidelines for ARDNA.

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