Action Calls: Lifetime Brands, Inc. (LCUT)

ACTION CALLS / Buy

Top Play (MICRO CAP GARP SCREEN)

Lifetime Brands, Inc. (LCUT) recent price $16.50

12 Mo PT = $22.50

Lifetime Brands, Inc. designs, sources, and sells branded kitchenware, tableware, and other products for use in the home in the United States and internationally. The company operates through three segments: U.S. Wholesale, International, and Retail Direct. It offers kitchenware products, including kitchen tools and gadgets, cutlery, cutting boards, shears, cookware, pantryware, spice racks, and bakeware, as well as novelty kitchen tools, tableware accessories, party goods, personal accessories, and other products; and tableware products comprising dinnerware, stemware, flatware, and giftware. The company also provides home solutions, which comprise other products that are used in the home, such as thermal beverageware, food storage, and home décor, as well as neoprene travel products consisting of bags, totes, cases, and sleeves; and sterling silver and pewter giftware products. In addition, it owns or licenses various brands.

Discount to Peer group based on 2018 eps estimates:

 

LCUT                   Peers

LTM 21-Nov-17    NTM 21-Nov-17   NTM

PE          15.64      10.95      20.59

EV/EBITDA           9.11        —             10.65

Div Yield 1.03%    —             1.63%

EV/Sales               0.62        0.60        1.40

P/CF       6.23        —             13.51

P/B         1.17        —             2.40

 

 

LCUT has attractive fundamentals relative to its group:

 

LCUT
(Dec-2016)
Growth   Industry
Gross Margin 38.77% 4Q 24.19%
Operating Margin 11.26% 4Q 9.35%
Net Margin 7.09% 4Q 5.91%
Asset Turnover 0.45 4Q 0.27
ROE 7.47% 4Q 3.80%
Times Interest Earned 15.8 4Q 15.6
Debt/Equity 48.38% 4Q 51.24%

 

Activist investor Mill Road Capital offered $20 for LCUT in March, still owns 10%

Investor Name % Outstanding Position (M) Filing Date Wellington Management Company, LLP 12.81 1.90 30-Sep-2017 Mill Road Capital Management LLC 10.99 1.63 13-Mar-2017 Dimensional Fund Advisors, L.P. 8.11 1.20 30-Sep-2017 BlackRock Institutional Trust Company, N.A. 4.59 0.68 30-Sep-2017 Perot Investments 3.24 0.48 30-Sep-2017

Based on multi-factor approach ; due to above avg margins and ROE, eps  growth momentum, discount valuation to peers, lack of coverage and activist investor ownership, LCUT should be afforded at 15x on 2018 eps. Thus we

See fair value at $22.50.

Singular Staff

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