Case 45- American Greetings
The final case is Case 45 (American Greetings). Please read the following guideline.
1. Each person performs the following analysis using the Excel file:
i) conduct a comprehensive analysis for the case
ii) submit a 10-page report (3-4 tables/figures allowed)
2. Write the report based on the following questions.
1) Describe American Greetings & Greeting Cards’ industry in detail.
2) Figure out the implied enterprise value based on the industry average EBITDA multiple (Exhibit 45.6) and the implied share price.
3) Figure out the weighted average cost of capital (WACC) based on Exhibits 45.6 and 45.9.
4) Figure out a cash flow table for fiscal years 2012 to 2015, based on Income statement (Exhibit 45.2) and financial ratios (Exhibit 45.8). Use the NWC(Fixed Asset) turnover ratio when you figure out NWC (Fixed asset). (Please use only Bearish Scenario) Please use the following hints:
Change in Net working capital = new NWC – old NWC
Investment (Change in Fixed asset) = new Fixed asset – old Fixed asset
5) Figure out the terminal value, the implied enterprise value, and the implied share price based on the discounted cash flows (DCF) method with a long-term growth of 1%.
6) Do you recommend stock repurchase or not? Why? Explain it in detail.
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