Qurate Retail QRTEA Stock Analysis


Qurate Retail QRTEA Stock Analysis

Catalysts:

  • Company transitioning in the ecommerce era by targeting women age 35-55 (not really affected by “influencer” marketing on social media

  • High retention rate among customers

  • Market leader with moat

  • Pandemic boon for business

Qurate Retail QRTEA Stock Analysis

Risks:

  • High debt

  • Competition with ecommerce businesses such as Amazon or Walmart will be hard


Financial Analysis:



Qurate Retail QRTEA Stock Analysis

Qurate Retail QRTEA Stock Analysis

Valuations:

  • My personal Biases:

  • I’m afraid of the debt and the inability of the company to refinance it - gut feeling

  • I don’t think the company should be returning money to shareholders right now

  • Assumptions:

  • 2021 numbers same as TTM for simplicity

  • Revenue growth of 4%, 3%, 20%, and 5% respectively for QxH, QVC International, Zulily, and others

  • Operating margins of 14%, 14%, -10%, and -5% respectively for QxH, QVC International, Zulily, and others

  • 80% of operating income converted into net income

  • FCF margin 2 percentage points higher than net income margin

Qurate Retail QRTEA Stock Analysis

  • Let’s see a scenario where the company maximizes repayment of debt

Qurate Retail QRTEA Stock Analysis

  • Enough cash left to return to shareholders


  • Discount rate of 18% for FCF

  • Terminal growth rate of 2%

  • Margin of safety of 30%


Qurate Retail QRTEA Stock Analysis

  • Exit Multiples based on P/FCF Ratio

  • Sales 10% higher in bull case and 20% lower in bear case

  • Shares outstanding stays the same

Qurate Retail QRTEA Stock Analysis

Conclusion

  • Looks undervalued but I will need to do further research to consider making an investment

Full Research and Analysis: https://ishfaaqpeerally.teachable.com/courses/662813/lectures/36565633

Qurate Retail QRTEA Stock Analysis

46 views0 comments

Recent Posts

See All