So stuff is now going for 10x FY19 EBITDA or for 5x LTM EBITDA -> is this actually cheap on a historical basis? If you look back at historical trading multiples (2019 year end TEV / FY 2019 EBITDA) is today's level really that cheap?
Let's take Dicks (DKS) for example. TEV/LTM EBITDA is like 5x. YE18 TEV/FY18 EBITDA = 4.5x, for 19 it was …
So stuff is now going for 10x FY19 EBITDA or for 5x LTM EBITDA -> is this actually cheap on a historical basis? If you look back at historical trading multiples (2019 year end TEV / FY 2019 EBITDA) is today's level really that cheap?
Let's take Dicks (DKS) for example. TEV/LTM EBITDA is like 5x. YE18 TEV/FY18 EBITDA = 4.5x, for 19 it was 4.8x, etc. It doesn't seem particularly cheap to me. I will also say that ROIC has trended down compared to past years and inventory turnover is at a historical low (3x /year), though this isn't surprising given the supply chain issues now. Anyhow, I don't see how DKS is particularly cheap.
I remember reading Einhorn's letter about how various cyclicals / capex heavy old industries trade at disgustingly low multiples. Various fund managers pitch these and they don't move and their fund collapses, further driving selling pressure. Perhaps a dumb question, but what's preventing this from being a value trap?
Also just a curiosity:
How come you look at EV/EBITDA instead of (EV+leases)/EBITDAR? A nitpick I guess so it doesn't really matter to the directionality of your argument.
So stuff is now going for 10x FY19 EBITDA or for 5x LTM EBITDA -> is this actually cheap on a historical basis? If you look back at historical trading multiples (2019 year end TEV / FY 2019 EBITDA) is today's level really that cheap?
Let's take Dicks (DKS) for example. TEV/LTM EBITDA is like 5x. YE18 TEV/FY18 EBITDA = 4.5x, for 19 it was 4.8x, etc. It doesn't seem particularly cheap to me. I will also say that ROIC has trended down compared to past years and inventory turnover is at a historical low (3x /year), though this isn't surprising given the supply chain issues now. Anyhow, I don't see how DKS is particularly cheap.
I remember reading Einhorn's letter about how various cyclicals / capex heavy old industries trade at disgustingly low multiples. Various fund managers pitch these and they don't move and their fund collapses, further driving selling pressure. Perhaps a dumb question, but what's preventing this from being a value trap?
Also just a curiosity:
How come you look at EV/EBITDA instead of (EV+leases)/EBITDAR? A nitpick I guess so it doesn't really matter to the directionality of your argument.
Where could I access that Einhorn's letter?