The Company is a distributor of professional beauty supplies in the United States based on store count and operates primarily through two business units, Sally Beauty Supply and BSG.
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While I believe this is a solid company with a strong competitive position in an attractive niche, I think the current stock price incorporates overly rosy expectations. Although results in the recent quarter were good, the company has yet to report a full quarter reflecting the loss of the L'Oreal. Additionally, the high level of debt incurred will result in less free cash flow.
Beauty Systems Group might have lost Loreal Professional, but Sally Beauty Supply still distributes Loreal products.
Sally Beauty sales seem to be strong and growing stronger from what I see in store. Instead of loosing sales in store it seems to be increasing.
They have shown amazing comps, even during recession.
As Cash flow from OPs expand, debt reduction will occur, multiple will shrink. Typical LBO metrics.
Once Debt/Asset reaches industry avg, a large cap will swallow SBH.
I would not be surprised to see SBH reaching $10B market cap.
Been family core holding since 2007 ! (was 2.6% of portfolio in 07)