CSS Industries Inc (NYSE:CSS): Cheap, liquid and buying back stock

Tobias CarlisleStocksLeave a Comment

CSS Industries Inc (NYSE:CSS) is another particularly cheap stock in the All Investable Screener, with an acquirer’s multiple of 6.2. It has a market cap of $278 million; $106 million in cash and equivalents, and no debt, giving it an enterprise value of $172 million; and it has generated $28 million in operating earnings TTM. It trades at book value and a slight premium to tangible book value and generates an FCF/EV yield of 13 percent. It pays a 2 percent dividend, and, with its payout ratio at 35 percent, can easily sustain it. It’s run up over 7 percent over the last 5 trading days, but remains deeply undervalued. Revenue has been wilting, and that’s why it’s cheap.

CSS is a simple business that makes “occasion and seasonal products” sold to mass market retailers. Occasion and seasonal products include decorative ribbons and bows, boxed greeting cards, gift tags, gift wrap, gift bags, gift boxes, gift card holders, decorative tissue paper, decorations, classroom exchange Valentines, floral accessories, Easter egg dyes and novelties, craft and educational products, stickers, memory books, stationery, journals, notecards, infant and wedding photo albums, scrapbooks, and other items that commemorate life’s celebrations.

The company has been buying back stock and has authorized an additional buy back:

PHILADELPHIA, May 19, 2015 (BUSINESS WIRE) — CSS Industries, Inc. CSS, +0.03% today announced that its Board of Directors has authorized an additional buy back of up to 500,000 shares of its Common Stock at prices and pursuant to other terms and conditions that the Company’s officers deem appropriate. Share repurchases under the program may take place through open market purchases or privately negotiated transactions. There are 9,343,753 shares of the Company’s Common Stock presently outstanding. Any such buy back is subject to compliance with applicable regulatory requirements and relevant covenants in the Company’s credit facility.

Here are the summary financials:

TTM 2015 2014 2013 2012 2011 2010 2009 2008 2007
Revenue 313 313 320 364 385 451 448 482 498 531
Gross Margin % 32.5 32.5 32.2 30.0 29.0 25.4 24.7 26.2 27.6 25.7
Operating Income 27 27 28 28 26 9 -31 28 39 38
Operating Margin % 8.5 8.5 8.7 7.8 6.7 1.9 -6.9 5.9 7.9 7.2
Net Income USD Mil 17 17 19 15 16 6 -24 17 25 24
Earnings Per Share 1.80 1.80 1.99 1.59 1.61 0.58 -2.46 1.70 2.31 2.19
Dividends 0.63 0.63 0.60 0.60 0.60 0.60 0.60 0.60 0.56 0.48
Payout Ratio % 35.0 33.8 31.3 39.0 119.4 103.9 35.3 24.2 23.8
Shares Mil 9 9 9 10 10 10 10 10 11 11
Book Value Per Share USD 28.92 29.19 27.92 26.67 25.91 24.21 24.09 26.99 25.54 24.26
Operating Cash Flow 33 33 28 30 26 32 49 28 42 55
Cap Spending -4 -4 -5 -4 -4 -3 -4 -14 -8 -5
Free Cash Flow 29 29 23 25 22 29 44 14 33 50
Free Cash Flow Per Share USD 3.15 2.44 5.36 4.62 2.98 4.59 1.38 3.04 1.85
Working Capital USD Mil 194 188 175 163 147 131 114 136 188

Source: Morningstar

 

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