Tilly’s, Inc. (NYSE: TLYS), a consumer discretionary company with a market capitalization of $429 million, saw its share price increase by 29.0% over the last month. As a small-cap stock, hardly covered by analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. However, could shares still be trading at a relatively cheap price? Let’s take a look at Tilly’s, Inc.’s outlook and value based on its most recent financial data to see if there are any catalysts for a price change.
Is Tilly’s, Inc. Still Cheap?
Good news, value investors! Tilly’s, Inc. is still a bargain right now. According to the valuation below, the intrinsic value for the stock is $18.34, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low.
|Analysis||Model Fair Value||Upside (Downside)|
|10-yr DCF Revenue Exit||$20.29||37.8%|
|5-yr DCF Revenue Exit||$21.28||44.5%|
|Peer Revenue Multiples||$21.65||47.0%|
|10-yr DCF EBITDA Exit||$19.59||33.0%|
|5-yr DCF EBITDA Exit||$20.30||37.8%|
|Peer EBITDA Multiples||$17.37||17.9%|
|10-yr DCF Growth Exit||$17.56||19.2%|
|5-yr DCF Growth Exit||$17.47||18.6%|
|Peer P/E Multiples||$12.41||-15.8%|
|Dividend Discount Model (multi-stage)||$13.67||-7.2%|
|Earnings Power Value||$20.12||36.6%|
Click on any of the analyses above to view the latest model with real-time data.
Tilly’s, Inc.’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta of 0.69. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.
What Does The Future Of Tilly’s, Inc. Look Like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations.
source: finbox.io data explorer
With Tilly’s, Inc.’s relatively muted EBITDA growth of 6.3% expected over the next five years on average, growth doesn’t seem like a key catalyst for a buying decision, at least in the short to medium-term.
How This Impacts You
Many investors separate stocks into value and growth categories based on quantitative metrics. However, one of the most famous investors in the world views this as foolish. In Warren Buffett’s 1992 letter to Berkshire Hathaway shareholders, Buffett touches upon a subject at odds with much of the investment industry:
“Most analysts feel they must choose between two approaches customarily thought to be in opposition: ‘value’ and ‘growth.’ Indeed, many investment professionals see any mixing of the two terms as a form of intellectual cross-dressing. We view that as fuzzy thinking… In our opinion, the two approaches are joined at the hip: Growth is always a component in the calculation of value.”
While investors tend to categorize stocks into value and growth, some of the most successful investors view growth as simply one component of a company’s value.
Although Tilly’s, Inc.’s future growth is relatively low, the company’s stock still appears to be trading at a discount to its intrinsic value. Therefore, it may be a great time to purchase shares or add more to your existing holdings.
But before making an investment decision, I recommend you continue to research Tilly’s, Inc. to get a more comprehensive view of the company by looking at:
Risk Metrics: how is Tilly’s, Inc.’s financial health? Find out by viewing our financial leverage data metric which plots the dollars in total assets for each dollar of common equity over time.
Valuation Metrics: how much upside do shares of Tilly’s, Inc. have based on Wall Street’s consensus price target? Take a look at our analyst upside data explorer that compares the company’s upside relative to its peers.
Efficiency Metrics: is management becoming more or less efficient over time? Find out by analyzing the company’s asset turnover ratio which measures the dollars in revenue a company generates per dollar of assets.
As of this writing, I did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.