JAH Market Research & Analysis Report
Updated Jul 25, 2014

Growth and Balance Sheet

The company reported net income of $52.1 million, or 42 cent diluted earnings per share, for the second quarter of 2014 ending June 30. That's down from a net income of $76.4 million, or 71 cents diluted earnings per share for the same quarter last year. Revenues for the second quarter were $1,975 million, up from $1,759 million for the same quarter last year. Out of the total revenue growth for the quarter, 3.1% was organic growth and 9.5% was attributable to acquisitions. Company’s segments reported favorable revenue growth results in comparison to the same quarter last year. Branded consumables segment revenue was up by 40.16% to $684.4 million; Consumer solutions segment revenue stayed nearly flat at $445.6 million; Outdoor solutions segment revenue was up by 1.86% to $754.9 million; Process solutions segment revenue was up 4.29% to $111.8 million. Gross profit margin for the quarter was 30.1% in comparison to 28.7% for the same quarter last year. Operating profit margin for the quarter was 6.83%, down from 7.07% for the same quarter last year. Cash flow provided by operating activities for the second quarter of 2014 was $83.7 million in comparison to $164.8 million for the same quarter of 2013. JAH forecasted third quarter of 2014 EPS are in the range of $1.21 to $1.30, compared to actual EPS of 86 cents for the third quarter of 2013. The financial strength indicators of the company are at satisfactory levels. Company’s current ratio is 2.28 and the industry average is 1.50. Moreover, the quick ratio of 1.48 is at better levels than the industry average of 1.08. The interest coverage ratio of 2.88 is lagging behind the industry average of 20.35. In terms of efficiency, the asset turnover ratio of 0.83 is trailing behind the industry average of 1.22; the inventory turnover ratio of 3.52 is also lagging behind the industry average of 5.56; the ROE of 10.49% is at worse levels than the industry average of 12.83%. 

Valuation

JAH PE stands at 36.96 above the industry average of 20.95, and above the stock market average represented by the S&P 500 average of 19.54. The company is currently trading above the maximum P/E ratio of 15x, and over the last five years, the company’s shares have traded in the range of 10.92x to 48.10x trailing 12-month earnings. JAH's current Price/Sales of 0.98 is below the average of its industry of 1.2. JAH’s head to head comparison to its main competitors shows that the company has second worse gross margin, and one that is below the industry average. However, the operating margin is the second best results in comparison to the selected competitors’ achieved margins, and in line with the industry average. The quarterly revenue growth of the company is the best result when compared to the selected peers, and higher than the industry average. JAH trades at the highest P/E ratio in relationship to the selected peers, and at second highest P/S ratio. JAH’s twelve trailing months EBITDA is $867.90 million, second highest only to VFC out of the selected competitors. The stock is currently trading below its intrinsic value of $61.05, this suggests that the stock is currently undervalued at these levels. The beta of 1.36 implies higher volatility of the stock with respect to the S&P 500. JAH has not shown favorable earnings consistency over the last five years. However, its annual earnings have increased by 4.82% over the last five years. The current quarter earnings in comparison to the same quarter last year have decreased by 40.85%. JAH’s Total Debt/Equity of 185.56 is above the required maximum, and it is above the industry average of 16.65. JAH’s current price levels are below the maximum level, 8.78% below the 52 week high of $64.01, and the technical analysis give positive view of the stock. The majority of the analyst ratings are outperform. JAH currently does not pay any dividends.  

About JAH

Jarden Corporation (Jarden) is a global consumer products company. The Company operates in three segments through a range of brands, including: Outdoor Solutions: Abu Garcia, Aero, Berkley, Campingaz, Coleman, ExOfficio, Fenwick, Gulp!, K2, Marker, Marmot, Mitchell, Penn, Rawlings, Shakespeare, Stearns, Stren, Trilene, Volkl and Zoot; Consumer Solutions: Bionaire, Crock-Pot, FoodSaver, Health o meter, Holmes, Mr. Coffee, Oster, Patton, Rival, Seal-a-Meal, Sunbeam, VillaWare and White Mountain, and Branded Consumables: Ball, Bee, Bernardin, Bicycle, Billy Boy, Crawford, Diamond, Dicon, Fiona, First Alert, First Essentials, Hoyle, Kerr, Lehigh, Lillo, Loew-Cornell, Mapa, NUK, Pine Mountain, Quickie, Spontex and Tigex. On December 31, 2012, American Capital Ltd sold its portfolio company Lifoam Holdings, Inc. to the Company. In October 2013, Jarden Corporation completed its acquisition of Yankee Candle Investments LLC from a fund managed by Madison Dearborn Partners, LLC.

Competitor Comparison

Jarden Corp. (NYSE: JAH) N.V.

Highlights

Jarden Corporation manufactures, markets, and distributes consumer products in the Unites States and internationally. The stock closed yesterday’s trading session at $58.39. In the past year, the stock has hit a 52-week low of $42.88 and 52-week high of $64.01. The intrinsic value of the stock is above the current price. JAH has a market cap of $7.53 billion and is part of the Consumer Goods sector.

• Presence in niche consumer categories   
• Strong brands across niche product categories
• Low-cost manufacturing base    

• Dependence on few customers could negatively impact sales
• Highly leveraged balance sheet

JAH Intrinsic Value

Stock Valuation Model & Intrinsic Value Definitions

Investors should keep an eye open for stocks that are trading within 10% of their 52-week highs, as it is likely to continue in its upward trend. JAH's 52 week high is $64.01, current price is $58.39, is 8.78% below the 52 week high.

The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be "moderate", which in this model states is not greater than 15. Stocks with moderate P/Es are more defensive by nature.  The company has a P/E ratio of 36.96 the average industry P/E ratio is 20.95 and is above the S&P 500 P/E ratio of 19.54.

When there is strong insider ownership which we define as 8% or more, management is more likely to act in the best interest of the company, as their interests are right in line with that of the shareholders. Insiders own 6.18 % of JAH stock. Management's representation is not large enough. This does not satisfy our minimum requirement; companies that pass this test are more attractive to our valuation model.

The model is using several technical indicators (MACD, RSI, MFI, OBV, position Indicators) to forecast the trend of the stock for 6 and 12 months, and assign a value.

JAH is trading in the range of $56.50 - $60.74 in the past 30 days. The stock has been showing support around the level of $55 and resistance in the $63 range. The stock is trading above the 50-Day Moving Average and above the 200-Day Moving Average. The RSI(14) is 42.88. After rising to the all-time high of $64.01 early in 2014, the stock contracted back, finding support around $55. Looking at the chart on page 1, it can be observed that the yesterday’s candle is a spike, which is a reversal pattern to the current bearish trend. A close above $60 would be even a stronger sign that the reversal is real. Our indicators give a positive view of JAH.

The financial health of the company the higher the better, we evaluate all the financial ratios of the company.

Investor’s sentiment for the stock.

The model assigns a value according to analyst’s recommendation for the stock. Analyst rating on Reuters.com is 5 Buy, 6 Outperform, and 2 Hold.

We are searching for EPS numbers that are better than the previous year's. One dip is allowed, but the following year's earnings should be higher than the previous year. JAH’s annual EPS for the last 5 years were 1.01, 0.79, 1.54, 2.06 and 1.77 this type of earnings action not favorable.

The company must have a low Debt/Equity ratio, which indicates a strong balance sheet. The Debt/Equity ratio should not be greater than 20% or should be less than the average Debt/Equity for its industry. JAH’s Total Debt/Equity of 185.56 is above the required maximum, and it is above the industry average of 16.65.

The EPS growth for this quarter relative to the same quarter a year earlier is above the minimum 15% that this model likes to see for a "good" growth company. Stocks with improving earnings are worthy of your extra attention. JAH’s EPS growth for this quarter relative to the same quarter a year earlier is -40.85%, below our target.

This stock valuation model looks for annual earnings growth above 12%, but prefers higher than 20%. JAH’s annual earnings growth rate over the past five years is 4.82%, below our target.

¹Tradespoon Score and Outlook: This score conveys Tradespoon’s long-term outlook of 1 to 5 years for a particular stock. Tradespoon uses proprietary methods to rate its trading picks on a scale from 1 to 10, with a 10 being the most favorable expected risk and return outlook. To determine a stock’s rating, Tradespoon uses an advanced algorithm that factors in fundamental and technical analysis to determine a stock's expected risk and return.