Stage Stores Inc Valuation – Initial Coverage $SSI

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – February 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Stage Stores Inc (SSI) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Stage Stores, Inc. operates specialty department stores mainly in small and mid-sized towns and communities. The Company’s department stores offer a range of brand name and private label apparel, accessories, cosmetics, footwear and home goods. The Company operates approximately 830 specialty department stores in over 40 states under the BEALLS, GOODY’S, PALAIS ROYAL, PEEBLES and STAGE nameplates and a direct-to-consumer business. The Company’s direct-to-consumer business consists of its e-commerce Website and Send program. The Company’s e-commerce Website includes a range of merchandise categories found in its stores, as well as other product offerings. The Company’s in-store Send program allows customers to have merchandise shipped directly to their homes if the preferred size or color is not available in their local store. The Company’s private label portfolio brands are developed and sourced through agreements with third-party vendors.

SSI Chart

SSI data by YCharts

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

[otw_shortcode_button href=”” size=”medium” icon_position=”left” shape=”square”]Learn More About Premium Membership[/otw_shortcode_button]


Downloadable PDF version of this valuation:

ModernGraham Valuation of SSI – February 2017

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $75,430,788 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.36 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -52.86% Fail
6. Moderate PEmg Ratio PEmg < 20 47.71 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.18 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.36 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.63 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

EPSmg $0.06
MG Growth Estimate -4.25%
MG Value $1.34
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $0.80
MG Value based on 0% Growth $0.47
Market Implied Growth Rate 19.61%
Current Price $2.64
% of Intrinsic Value 197.68%

Stage Stores Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, insufficient earnings stability or growth over the last ten years, and the high PEmg ratio. The Enterprising Investor has concerns regarding the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $0.83 in 2013 to an estimated $0.06 for 2017. This level of demonstrated earnings growth does not support the market’s implied estimate of 19.61% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Stage Stores Inc revealed the company was trading above its Graham Number of $0. The company pays a dividend of $0.6 per share, for a yield of 22.7%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 47.71, which was above the industry average of 22.16. Finally, the company was trading above its Net Current Asset Value (NCAV) of $1.34.

Stage Stores Inc scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $1.34
Graham Number $0.00
PEmg 47.71
Current Ratio 2.36
PB Ratio 0.18
Current Dividend $0.60
Dividend Yield 22.73%
Number of Consecutive Years of Dividend Growth 7


Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 10/1/2016
Total Current Assets $648,528,000
Total Current Liabilities $275,121,000
Long-Term Debt $236,592,000
Total Assets $1,002,339,000
Intangible Assets $15,235,000
Total Liabilities $612,262,000
Shares Outstanding (Diluted Average) 27,155,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$0.95
Jan2016 $0.12
Jan2015 $0.96
Jan2014 $0.51
Jan2013 $1.19
Jan2012 $0.92
Jan2011 $0.99
Jan2010 $0.75
Jan2009 -$1.71
Jan2008 $1.24
Jan2007 $1.25
Jan2006 $1.27
Jan2005 $1.15
Jan2004 $1.18
Jan2003 $1.14
Jan2002 $0.49
Jan2001 -$2.56
Jan2000 -$4.47
Jan1999 $0.06
Jan1998 $0.27
Jan1997 -$0.08

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.06
Jan2016 $0.62
Jan2015 $0.88
Jan2014 $0.85
Jan2013 $0.83
Jan2012 $0.58
Jan2011 $0.44
Jan2010 $0.29
Jan2009 $0.26
Jan2008 $1.23
Jan2007 $1.22
Jan2006 $1.15
Jan2005 $0.82
Jan2004 $0.15
Jan2003 -$0.60
Jan2002 -$1.39
Jan2001 -$2.00

Recommended Reading:

Other ModernGraham posts about the company

None. This is the first time ModernGraham has covered the company.

Other ModernGraham posts about related companies

Kate Spade & Co Valuation – Initial Coverage $KATE
Gap Inc Valuation – January 2017 $GPS
PVH Corp Valuation – January 2017 $PVH
Steve Madden Ltd Valuation – Initial Coverage $SHOO
American Eagle Outfitters Valuation – January 2017 $AEO
Chico’s FAS Inc Valuation – Initial Coverage $CHS
Hanesbrands Inc Valuation – December 2016 $HBI
Nike Inc Valuation – November 2016 $NKE
Wolverine World Wide Inc Valuation – September 2016 $WWW
Ralph Lauren Corp Valuation – August 2016 $RL


The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.






Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.