Are there any brands you like in the clothing manufacturing sector? # US stocks

The 87th original of Xiaoyao Investment School

Star description:
⭐️: the best choice, with obvious profit and growth advantages, and a big discount on the price.
⭐️⭐️: the value or price is slightly lower than the best choice
⭐️: only suitable for certain preferred portfolios, such as ultra-small cap stocks, ultra-fast growth stocks, crisis stocks, defective stocks, etc.

Combination recommendations:
Set the investment quota according to the starFor example, $100 for one star, $200 for two stars, and $300,400 for three stars
If less than 10, choose only stocks with an investment index of 3 stars.
If there are less than 30, then only 2-star and 3-star stocks are selected.
If more than 30, then 1 star to 3 stars can be selected.

The following is the analysis process 👇

Today is April 26, 2022, Tuesday, before the U. S. stock market, let's take an inventory of the clothing manufacturing sector. A total of 24 stocks, the market capitalization from 10.68 million to 21.1 billion, of which more than 300 million 16, we will study these 16 stocks.

This section is very close to our life, and almost every stock has a famous brand.

From the perspective of price-to-earnings ratio, there are 4 below 0, 2 below 8.5, 7 from 8.5 to 25, and 3 above 25. The profitability of the sector is medium and the valuation is medium.

Let's take a look at two stocks with a price-to-earnings ratio of less than 8.5.

The income statement shows that the decline in operating profit in 2018 and 2020 was caused by an increase in the share of sales management expenses, while the surge in operating profit in 2022 was caused by an increase in gross profit margin (53 → 58 per cent), not an improvement in management efficiency. Other non-operating income reached 180 million in 2022, further boosting net profit. At present, it is very difficult to judge the sustainability of growth in 2022. The rise and fall of gross profit margin is more cyclical, while non-operating income is one-off. Excluding non-operating income, net profit is 770 million, corresponding to 6.8 times price-to-earnings ratio.

The balance sheet shows that interest-bearing debt accounts for a relatively high proportion, of which long-term borrowing of 2.3 billion is a big burden. Goodwill is 2.83 billion, accounting for half of the net profit of 5.3 billion.

5.75 times price-to-earnings ratio (adjusted 6.8), 1 times price-to-net ratio, you can look at the follow-up annual report before making a judgment.

One more thing to say here, any one-off ultra-high growth should be treated with caution, analyze whether the reason is unsustainable, then assume it is unsustainable, and then once the stock price falls back, it will suffer the double blow of valuation and profit, which is bad for mental health in the short term.

The income statement shows that in 2022, when revenue returned to only 88% before the outbreak, the increase in operating profit and net profit was mainly achieved by significantly reducing the proportion of sales and management expenses (26.3% → 23.4%).

Net operating volume and free cash flow are generally good, has been in a net inflow, overall is also an upward trend.

The asset-liability ratio is 44.6%, accounts receivable 600 million, inventory 500 million, slightly more than 2.8 billion revenue, accounts payable 250 million, far less than receivables, the status of the enterprise is not very good. The interest-bearing debt is a bit high, with annual interest expenses reaching 50 million, accounting for 4% of the net profit of 200 million, which is a heavy burden. Current ratio 3.2, quick ratio 2.1, cash flow is relatively safe.

At present, the price-to-earnings ratio is 7 times earnings and the price-to-book ratio is 0.9 times, so you can choose carefully (⭐️).

Let's take a look at seven stocks with price-to-earnings ratios between 8.5 and 25.

The income statement shows that other net income reached 158 million in 2021, and if this part is excluded, the net profit can actually exceed 100 million. Among them, the subject of impairment of capital assets has gone too far, with an impairment of 94 million in 2020, an increase of 30 million in 2021 and zero by 2020. Intentionally or unintentionally, this subject creates a profit difference of 120 million between 2020 and 2021.

In addition, large fluctuations in gross margin distorted profits, falling from 29% in 2017 to 25% in 2019, and then rising to 32% in 2021 after an one-off sharp decline in 2020.

These combined effects led to a surge in profits in 2022, which is in doubt.

The current price-to-earnings ratio of 11.6 is not very attractive.

The income statement showed that the gross profit margin increased from 55.5% to 61.8% in 2022, which contributed the biggest profit increase.

Gross profit cannot rise indefinitely, and growth cannot last long, and the current price-to-earnings ratio of 12.3 times earnings needs better revenue growth support.

Better growth figures are needed at 12.5 times earnings.

At present, the discount is not enough with a price-to-earnings ratio of 14 times earnings.

Columbia OutdoorWith the exception of 2020, revenue maintained four years of growth, operating profit returned to growth after a decline of 65.3% in 2020, with an average growth rate of 12% for five years, while net profit experienced a sharp decline of 43% in 2017 and another decline of 67.3% in 2020. It is not very stable, with an average growth rate of 12.3% for five years and a slightly higher growth rate of earnings per share.

At present, the discount of 16.4 times earnings is not enough.

The income statement shows that restructuring and M & A fees have soared since 2017, from 80m to 180 million, and then to 433 million in 2020 and 34 million in 2021.

Gross margin has been rising, from 45% in 2017 to 50.4% in 2021, which is very good.

At present, with a price-to-earnings ratio of 20.5, the market should think that the company has been successfully restructured and embarked on the road of rapid growth. We can wait for the new results to come out.

Let's take a look at three stocks with a price-to-earnings ratio of more than 25.

Revenue has increased for four years in a row, and the fiscal year 2021, which was most affected by the epidemic, fell 5.7% and 2022Q3 increased by 23.7%. Operating profit began to decline in fiscal 2020, falling 39 per cent in 2021, while net profit fell 54 per cent in 2021. Even based on the net profit of 1.52 in 2020, the current price-to-earnings ratio is 15.7, which can be judged by the annual report.

In five years, only revenue rose in 2019 and plummeted 74% in 2018. Operating profit has been falling since fiscal 2020 and halved in 2021. Net profit fell 46% in fiscal 2020 and 40% in fiscal 2021. Even based on a net profit of 1.26 billion in 2019, the price-to-earnings ratio is 16.7, which is not supported by growth data.

The loss in 2020 is mainly due to the sharp decline in gross profit margin in 2020, and the loss of 444 million in 2021 is due to the suspension of operating profit, which should be an one-off. Excluding this loss, profits in 2021 are calculated at 520 million, and there is still no discount at the current price-to-earnings ratio of 9.4.

Finally, take a look at the four loss-making stocks whose price-to-earnings ratio is less than 0.

Its brands include Versace, Jimmy Choo and Michael Kors.

Revenue increased for three consecutive years before the epidemic, but operating profits declined for five consecutive years, mainly due to the increase in operating expenses. In addition, the recent two financial reports had very high "impairment of capital assets", reaching 700 million and 300 million respectively, resulting in actual losses in the past two years. In the past five years, there have been more than 100 million fees for special income subjects, which is becoming more and more intense.

Even so, market valuations are still high, with a market capitalization of 7.2 billion and a price-to-earnings ratio of 560 million based on operating profit of 560 million in 2020.

Ralph Lauren is my favorite brand many years ago, and the quality of the shirt is especially good.

With the exception of a 2% slight increase in 2019, revenue as a whole is on a downward trend. Operating profit fell 42 per cent in 2020 and 46 per cent in 2021 after two years of growth in 2018 and 19. The trend of net profit is similar to that of operating profit, except that it will enter the loss range by 2021.

Is it the butterfly effect caused by the replacement of Fred Perry in the past two years? I checked that FP has not been listed yet, and I must buy a few hands when it is listed.

The income statement shows that the increase in profits in 18 and 19 and the decline in profits in 20 years are mainly caused by changes in gross profit margin. The loss in 2021 was mainly due to a sharp drop in revenue. The current price-to-earnings ratio TTM16.3 shows that the 2022 annual report data should be very good, wait and see for the time being.

At present, the company has a market capitalization of 2.54 billion, and even based on the highest operating profit of 110 million in 2019, the price-to-earnings ratio has reached 23, and the valuation is not low.