New Value Analysis of Debenhams Plc (LSE:DEB)

Published by Studio 61 Wealth Management at 2nd July 2017

Debenhams Plc image 2017-07-02 at 16.08.38

New Value Analysis of Debenhams Plc (LSE:DEB)

A new value analysis of Debenhams Plc (LSE:DEB), a company listed on the London Stock exchange, has been added to our research pages here.

DEB is an international multi-channel retailer with its origins in Britain. DEB has 250 department stores in 27 countries, and online in 60 countries.

Why would a value investor consider an investment in Debenhams Plc?

The simple answer as to why value investor would consider an investment in Debenhams Plc common stock is that the common stock of DEB is very cheap. A value investor will look at the price of a common stock against tow main data points. The first data is the earnings and second is an estimate of the assets available to the owners of the common stock after creditors have been paid.

The price to earnings and the price to book, sometimes referred to as net asset value, makes the Debenhams Plc common stock look very cheap. Once the value metrics have indicated that the common stock is cheap a value investor needs to look for indicators of risk indicated by the capital structure of the company.

The easiest indicator of risk for common stock holders is the level of debt. DEB has relatively low funded debt levels, but has some risk relating to short term creditors that must be considered by value investors. The risk comes form the level of trade creditors. However, DEB has sufficient short term financial resources form its bank facilities to meet any short term trade credit issues.

More conservative investors can consider the Debenhams bond with a 5.25% coupon due in 2021 with ISIN XS1081972850. This bond is currently trading a round par and will be the subject of the next analysis on this site.

To find out if a value investor should consider an investment in Debenhams Plc common stock click here to download the new analysis.