Conclusion:
Aeropostale buy shares at current prices, since in the analysis we see that:
* ARO spent the four criteria for evaluating actions.
* ARO management has allowed them to get a 42% average annual increase in earnings per share.
* A company that has a good financial shape, has no long-term debt.
* It is expected to buy shares of ARO a rate of return on investment of between 39% and 51%.
ARO Action Analysis
PER
The PER is 9.87, less than 15 and less than its average over the past 5 years is 13.98. ARO so than the first criterion of equity research.
Año | PER |
2.009 | 9,9 |
2.008 | 12,3 |
2.007 | 14,8 |
2.006 | 14,7 |
2.005 | 18,2 |
Media | 13,98 |
The current PER can be seen at: http://www.google.com/finance?q=NYSE:ARO or 3aARO http://moneycentral.msn.com/detail/stock_quote?Symbol=US%
PER historical data we can obtain at: http://moneycentral.msn.com/investor/invsub/results/compare.asp?Page=TenYearSummary&Symbol=US% 3aARO
Debt:
The ratio of debt / equity ratio is 0%, so ARO than the second criteria of equity research.
The debt / equity ratio can be seen in http://moneycentral.msn.com/investor/invsub/results/hilite.asp?Symbol=US% 3aARO as deb / equity ratio.
Earnings per share growth.
The growth in earnings per share of the last 10 years was on average 42% annually. Also in the last year the company recorded an increase of 64%. For this reason ARO than the third criterion for evaluating actions.
Data can be obtained from http://moneycentral.msn.com/investor/invsub/results/compare.asp?Page=TenYearSummary&Symbol=US% 3aARO
Año | Valor de libros por acción (Book Value/ Share) | Retorno sobre el patrimonio (Return on Equity (%)) | Beneficio por acción | Simulando un incremento anual del 42% con respecto a año 2001 |
2010 | 4,62 | 53% | 2,44 | 2,47 |
2009 | 3,54 | 42% | 1,49 | 1,74 |
2008 | 1,97 | 66% | 1,29 | 1,22 |
2007 | 2,69 | 34% | 0,92 | 0,86 |
2006 | 2,34 | 30% | 0,69 | 0,61 |
2005 | 1,91 | 35% | 0,67 | 0,43 |
2004 | 1,48 | 29% | 0,43 | 0,30 |
2003 | 1,07 | 25% | 0,26 | 0,21 |
2002 | 0,67 | 41% | 0,27 | 0,15 |
2001 | 0,34 | 31% | 0,11 | 0,11 |
In the cash flows we see that when you buy shares of ARO can expect a rate of return on our investment of between 42% and 53% at 10 years assuming a final PER of 10, which I consider prudent due to increased action and low, non-existent debt. ARO therefore exceeds the fourth criterion of equity research.
Payo ut data, return on equity and a share price of books we obtain from http://moneycentral.msn.com/investor/invsub/results/hilite.asp?Symbol=US% 3aARO
The increase in earnings per share we used was the smaller of the calculated criterion 3.
The cash flows are:
TIR model 1 to 10 years
Buy / sell stock | Earning per share | Dividend | Cash flow | |
Año 0 | - 10,10 | 1,34 | - | - 10,10 |
Año 1 | - | 1,92 | - | - |
Año 2 | - | 2,74 | - | - |
Año 3 | - | 3,92 | - | - |
Año 4 | - | 5,60 | - | - |
Año 5 | - | 8,01 | - | - |
Año 6 | - | 11,46 | - | - |
Año 7 | - | 16,39 | - | - |
Año 8 | - | 23,43 | - | - |
Año 9 | - | 33,51 | - | - |
Año 10 | 479,14 | 47,91 | - | 479,14 |
TIR | 47% |
TIR Model 2 to 10 years
Buy / sell stock | Book value per share | Earning per share | Dividend | Cash flow | |
Año 0 | - 10,10 | 5,17 | 1,68 | - | - 10,10 |
Año 1 | - | 6,85 | 2,23 | - | - |
Año 2 | - | 9,08 | 2,96 | - | - |
Año 3 | - | 12,04 | 3,92 | - | - |
Año 4 | - | 15,95 | 5,19 | - | - |
Año 5 | - | 21,15 | 6,88 | - | - |
Año 6 | - | 28,03 | 9,12 | - | - |
Año 7 | - | 37,15 | 12,09 | - | - |
Año 8 | - | 49,23 | 16,02 | - | - |
Año 9 | - | 65,25 | 21,23 | - | - |
Año 10 | 281,43 | 86,49 | 28,14 | - | 281,43 |
TIR | 39% |
Buy / sell stock | Earning per share | Dividend | Cash flow | |
Año 0 | - 10,10 | 1,34 | - | - 10,10 |
Año 1 | - | 1,92 | - | - |
Año 2 | - | 2,74 | - | - |
Año 3 | - | 3,92 | - | - |
Año 4 | - | 5,60 | - | - |
Año 5 | 80,13 | 8,01 | - | 80,13 |
TIR | 51% |
TIR Model 2 to 5 years
Buy / sell stock | Book value per share | Earning per share | Dividend | Cash flow | |
Año 0 | - 10,10 | 5,17 | 1,68 | - | - 10,10 |
Año 1 | - | 6,85 | 2,23 | - | - |
Año 2 | - | 9,08 | 2,96 | - | - |
Año 3 | - | 12,04 | 3,92 | - | - |
Año 4 | - | 15,95 | 5,19 | - | - |
Año 5 | 68,81 | 21,15 | 6,88 | - | 68,81 |
TIR | 47% |
In http://investmentandeconomictheories.blogspot.com/p/itt-educational-services-esi.html can see an example with a detailed explanation of the model of analysis and evaluation of actions.
