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JANUS PREMIER GLOBAL VALUE FUND JANUS PREMIER GLOBAL VALUE FUND

JANUS PREMIER GLOBAL VALUE FUND - PowerPoint Presentation

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JANUS PREMIER GLOBAL VALUE FUND - PPT Presentation

Praneeth Raj Singh VidyaSri velloo Bayan Ismaeel Introduction Oil amp Gas Industry is NOT like other industries Subject to Global Politics and Foreign Policy Affects the fiscal health and budgets of many states OPEC ID: 486700

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Presentation Transcript

Slide1

Chun How Beh, Kahmun Yap, Jade Vuong

Brooks Case CompetitionUnder Armour, Inc.Slide2

Introduction

Industry & Business OverviewFinancial Analysis

Turnaround Strategies

Valuation

RecommendationSlide3

Industry and Business Overview

Competitive Industry

Young Company

High barriers for new entrants

Founded in 1996

Operate in 5 continents

Retailers, distributors and direct to consumer sales channel

Apparel: 71%

Footwear 17%

Accessories: 9%Slide4

CompetitorsSlide5

Management

Director of Under Armour, Inc. since 1995.

Founder of Under Armour, Inc.

Chairman of the BOD and CEO since 1996. President of Under Armour, Inc. since August 2010.

28.95 million shares of Class C stock and 189,459 shares of Class A stock

Patrik Frisk,

President and COO since July 10, 2017.

He was CEO of The ALDO Group

Coalition President of Outdoor Americas with responsibility for The North Face®, Timberland®, JanSport®, lucy® and SmartWool® brands. Before that, Mr. Frisk was President of the Timberland® brand

Hold 522,740 shares

David E. Bergman,

Appointed as CFO of Under Armour, Inc. on November 30, 2017.

Acting CFO of Under Armour, Inc. from February 2017 to November 30, 2017.

Joined of Under Armour, Inc. in 2005 and has served in various Finance and Accounting leadership roles

Hold

130,374 shares* Slide6

Common Size and % ChangeSlide7

Common Size and % ChangeSlide8

Common Size and % ChangeSlide9

Common Size and % ChangeSlide10

Financial Ratio ComparisonSlide11

Financial Ratio ComparisonSlide12

Common Size and % ChangeSlide13

Profitability

4.74% behind industry leader

Source: Team Estimates and Mergent OnlineSlide14

Source: Team EstimatesSlide15

Source: Team EstimatesSlide16

Debt Analysis

Source: Team Estimates & Mergent OnlineSlide17

Turnaround Strategies

Restructuring plan (layoff creates uncertainty)

Upgradation of their ERP systems with SAP (causes missed orders)

The increase of its focus on footwear relative to athletic apparelSlide18

Alternative Courses

Recruit a new shoe designer

Increase advertising expense in 2021Slide19

Valuation: Discounted Cash Flow

Intrinsic Value: $11.21Slide20

DCF Assumptions - WACCSlide21

Business Risks

Consumer spending behaviorCurrency headwinds

Commodity Prices

Cost of sponsorship and designation

AcquisitionSlide22

Under Armour’s Outlook

ROIC decreased over time Company's days sales in inventory has increased show the decrease in asset efficiency

Poor investment plan

How to improve?

Better supply chain management system

Efficient in distribution system

Women Friendly product

More transparent and inclusive cultureSlide23

Recommendation

In light of the factors that contributed to our bearish outlook for Under Armor, the following alternatives can be considered by the company to turn things around. They need to establish a better relationship with their suppliers to create a better supply chain management system. Also, they have to come out with a more efficient supply chain distribution system. Besides that, Under Armour have to step up their game in capturing the increasing popularity in the athleisure. Also, they need to create a more women friendly product line in order to win a larger market shares. Besides that, Under Armor’s management also need to establish a more transparent and inclusive company culture, as a countermeasure to its high executive turnover ratio and foster better communication between top executive and employees to avoid knowledge gap and inefficient implementation of new company updates. Another possible course UA can take is to increase their budget in advertising when most of their debt will be mature in 2021. In 2012 and 2016, the company spent 205 million and 477.5 million, respectively on marketing expense. The amount double in just 4 years but the expense is small compared to how much Nike spends in advertising. Nike spends over $3 Billion in advertising in 2016 while UA did 3.96 billion in sales in the same year.Slide24

Conclusion

Cyclical companyIntrinsic value is $11.21 -> Overvalued

New management

Restructuring Plan

Poor Financial Performance

We do not see positive outlook for Under Armour base on its current performance and anticipated company directionSlide25

Appendices: Summary of Financial Ratios

Source: Team EstimatesSlide26

Sensitivity Analysis

Source: Team EstimatesSlide27

Comparison

Source: Mergent ReportSlide28

EV/EBITDA Comparison

Source: YchartsSlide29

Price to Book Value Comparison

Source: Ycharts