FJ Benjamin valuations projection

FJ Benjamin is a high end luxury goods retailer.

I own 20 lots of this stock at an average of 0.6175.

Here are some figures :

Return of Equity (ROE)	Net income/Equity
	Net income	Equity	ROE	ROE growth
2007	21,468	198,614	10.80	1.85
2006	10,171	95,840	10.61	92.3
2005	4,262	77,249	5.51	108.7
2004	2021	76,466	2.64	34.32
2003	1517	77,098	1.96	-63.3
2002	3100	57,819	5.36

Not a high ROE business. They did have some impressive ROE growth between 2005 and 2006.

Net Profit Margin (NPM)	Net income/Revenue
	Net income	Revenue	NPM	NPM growth
2007	21,468	257,618	8.33	53.40
2006	10,171	187,235	5.43	85.65
2005	4,262	145,658	2.92	68.77
2004	2021	116,573	1.73	20.64
2003	1517	105,569	1.43	-47.55
2002	3100	113,147	2.73

It is also not a high NPM business.

Liquidity
	Total Current Assets	Total Current Liabilities	Current ratio
2007	251,050	102,003	2.46
2006	107,251	74,727	1.43
2005	73,557	57,538	1.27
2004	58,112	40,969	1.41
2003	56,490	40,287	1.40
2002	61,924	55,494	1.11

Solvency
	Long Term Debt	Total Shareholder Equity	LT Debt/Equity Ratio
2007	3104	198,614	1.56
2006	21210	95,840	22.13
2005	21634	77,249	28.0
2004	20242	76,466	26.47
2003	20984	77,098	27.21
2002	31702	57,819	54.82

FJ's has good cash position though. Little long term debt at present and current ratio is healthy.

Free Cash Flow
	Net cash from operating activities	Capital expenditures	Free Cash Flow(FCF)	FCF/Revenue
2007	-31,148	11945	-43,093	-16.72
2006	7,694	4107	3,587	1.91
2005	5,529	3396	2,133	1.46
2004	2,444	3128	-684	-0.58
2003	5,803	2147	3,656	3.46
2002	13,630	3235	10,395	9.18

It is interesting to note though that the free cash flow for FJ is not anything to crow about. So where is the cash coming from? I have to look into this further.

However EPS growth has been good.

EPS Data	EPS	EPS growth
Year 1	1.22
Year 2	0.53	-56.55
Year 3	0.71	33.96
Year 4	1.5	111.26
Year 5	3.53	135.33
Year 6	5.07	43.62

Assuming an EPS growth of 15% for the next 5 years,

	Projected EPS at yr end
End year 1	5.83
End year 2	6.70
End year 3	7.710
End year 4	8.86
End year 5	10.19

EPS at the end of next 5 years will be 10.19 cents.

If we use a PE of 10, the price of the stock in 5 years should be $1.02

Using dividend price valuations, we first find out what the dividend payout ratio is for the past few years.

	Dividend	EPS	Dividend payout ratio
2002	0.1	1.22	8.19
2003	0.25	0.53	47.16
2004	0.75	0.71	105.63
2005	1.1	1.5	73.33
2006	2.4	3.53	67.98
2007	3.5	5.07	69.03

A very impressive dividend payout ratio! However this is including the special dividends paid out. But it is worthwhile to note that they frequently pay out special dividends. In fact I did not include the 13 cents capital distribution they gave out last year.

Total EPS for next 5 years based on EPS growth of 15% is 39.31 cents. Assuming a modest 20% dividend payout ratio, the total dividend paid out over next 5 years is 7.86 cents.

Current price is $0.425. So price in 5 years based on dividends is $0.50

Present price to pay for stock Year 5 0.480 Year 4 0.462 Year 3 0.444 Year 2 0.427 Year 1 0.410

Hence discounted over the 5 years, if I buy the stock at 0.41 today, I will get a dividend yield of 4% over the next 5 years.

Current price of stock	0.425
Current EPS	0.0507
Current PE ratio	8.382642998

FJ Benjamin looks more like a dividend play. They have a strong cash position but their business does not seem to be very profitable. Strange combination.......