1 / 17

Zagg (NASDAQ: ZAGG)

Zagg (NASDAQ: ZAGG) . Jason Chan Michael DeRenzo Rodrigo Serna. April 3, 2014. Agenda. Introduction Company Overview Macroeconomic Outlook Relevant Stock Market Prospects Financial Analysis Valuation Recommendation. Company Overview .

aulii
Download Presentation

Zagg (NASDAQ: ZAGG)

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Zagg (NASDAQ: ZAGG) Jason Chan Michael DeRenzo Rodrigo Serna April 3, 2014

  2. Agenda • Introduction • Company Overview • Macroeconomic Outlook • Relevant Stock Market Prospects • Financial Analysis • Valuation • Recommendation

  3. Company Overview • Founded in 2005 and headquartered in Salt Lake City, Utah • Designs, produces, and distributes mobile and media accessories, namely InvisibleShield • Blackrock currently holds 10.75% • Mainly produce protective screen coverings under InvisibleShield brand name • Moving into mobile device peripherals such as headphones, power products, and gaming products • Fastest growing market segments are tablet and smartphone • Look to serve global accessories market which is expected to increase from $44bn during 2013 to $60bn in 2016 Source: Form 10-K 2013 Company Overview MacroOutlook Stock Market Prospects Financial Analysis Valuation

  4. Company Overview – Management’s Outlook • Product offerings • New offerings in gaming, mobile, and audio accessories • Continued growth in existing mobile device accessories including keyboards, screen protectors, and cases • International sales • Distribution center in Ireland to compete in European market and increase brand recognition • Focus on distribution through targeted, global distribution partners • Increase volume from internet sales Source: Form 10-K 2013 Company Overview MacroOutlook Stock Market Prospects Financial Analysis Valuation

  5. Macroeconomic Outlook – Key External Drivers • Disposable income • Projected sales growth rates in key market segments such as tablets and smart phones • Cost of labor in China • Cost of raw materials • Shift from in-store sales to online sales • Potential Product shift through innovation Source: http://www.theguardian.com/money/2012/mar/12/family-income-dip-again Company Overview Macro Outlook Stock Market Prospects Financial Analysis Valuation

  6. Industry Overview – Consumer Electronics Current Performance • Consistent demand Keys to Success • Innovation (Differentiation) • Control cost structure (Low cost leadership) • Distribution networks Industry Trends • Little to no long term debt • Heavy R&D expenditures • Preferences shifting tomulti-purpose devices Sources: http://clients1.ibisworld.com/reports/us/industry/currentperformance.aspx?entid=1024 http://www.statista.com/statistics/200248/forecast-of-tablet-pc-sales-in-the-united-states-from-2010-to-2015/ Company Overview Macro Outlook Stock Market Prospects Financial Analysis Valuation

  7. Industry Analysis – Consumer Electronics Revenue Revenue Growth • Expected revenue: $77.3 Billion in 2015, upswing projected starting 2015. • Annualized growth rate of 1.88% from 2012 to 2018. Source: http://clients1.ibisworld.com/reports/us/industry/industryoutlook.aspx?entid=1024 Company Overview Macro Outlook Stock Market Prospects Financial Analysis Valuation

  8. Industry Life Cycle Maturity • Competition fierce • Reduction in cost is imperative • Increase in Market Share • Continuous innovation to extend maturity phase Decline Maturity Introduction Growth Total Industry Revenue Time Source: IBIS World Company Overview Macro Outlook Stock Market Prospects Financial Analysis Valuation

  9. Porter’s Five Forces Company Overview Macro Outlook Stock Market Prospects Financial Analysis Valuation

  10. Understanding Market Power Company Overview Macro Outlook Stock Market Prospects Financial Analysis Valuation

  11. Recent Stock Performance 20 & 200 Day Moving Average Stock Chart • ZAGG’s stock price has been well below the 200 day moving average since the end of Dec, 2012. • Currently, there could be a potential upswing in the near future. Source: Yahoo Finance Company Overview Macro Outlook Stock Market Prospects Financial Analysis Valuation

  12. Financial Analysis - Ratios Company Overview Macro Outlook Stock Market Prospects Financial Analysis Valuation

  13. Financial Analysis – Dupont Company Overview Macro Outlook Stock Market Prospects Financial Analysis Valuation

  14. Valuation – WACC Zagg’s current debt consists of a revolving credit facility, which was used to pay down long-term notes payable Zagg is paying an effective interest rate of 1.11% on the revolving line of credit Business Risk Premium attributed to limited cost of debt, competitive playing field Zagg competes in Company Overview Macro Outlook Stock Market Prospects Financial Analysis Valuation

  15. Valuation – DCF Company Overview Macro Outlook Stock Market Prospects Financial Analysis Valuation

  16. Valuation – Comparables Company Analysis Company Overview Macro Outlook Stock Market Prospects Financial Analysis Valuation

  17. Recommendation Things to Look For • Improved management of inventory levels • Increased brand recognition and product offerings • Stabilized gross and operating margins • Expansion to adjacent markets WATCH LIST

More Related