founded: 1989, ASX code: FAN, homepage: www.fantasticfurniture.com.au

Overview
Fantastic Holdings Limited is one of the leading Australian furniture retailers specializing in the import and production of non expensive furniture items. As of June 2007 Fantastic Holdings operates about 80 stores and provides employment to approximately 1000 people throughout Australia.

Analysis of June 2007 financial results:

• Market Cap: Depending on the daily stock price of this company the total market capitalization is around $400 million over 94 million shares on issue
• Shareholders Equity: $51 million making the stock’s book value approx. $0.54 per share (13.3% growth on FY 2006)
• Earnings per share: $0.17 making the average EPS growth in last 5 years about 21.8%
• Return on Equity: 31.4%, averaging around 34.7%pa in last 3 years
• Balance Sheet: Working capital of $33.2 million (ie. $0.35 per share) versus total debt of $9.1 million

GROWTH STOCK:

• Conservative forecast of average EPS growth in next 10 years: 13%
• Share price in 10 years time: about $10.11 (EPS in year 10 based on forecasted yearly EPS growth times average P/E)
• Total shareholders return in 10 years times: $12.24 (share price of $10.11 plus $2.13 of the 10 years worth of dividends if the current payout ratio of about 60% persists)
• Rate of Return in next 10 years based on the beginning of December 2007 price of $4.35 per share: 10.9%pa

Pros and cons:
+++ Great levels of ROE as well as yearly EPS growths
+++ Very strong balance sheet (ie. entire debt could be easily paid off using about 65% of one year’s net earnings)
+++ Very high levels of company stock ownership amongst the top management, where top executives hold over 55% of all outstanding shares on issue
— Operates in a cyclical, consumer income sensitive market against with very strong competition pressures from companies such as Harvey Norman, Freedom Furniture, IKEA and Domayne

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This entry was posted on Monday, December 10th, 2007 at 8:53 pm and is filed under Australian stock. You can follow any responses to this entry through the RSS feed. You can leave a response, or trackback from your own site.