Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, brand management company Iconix Brand Group
With that in mind, let's take a closer look at Iconix's business and see what CAPS investors are saying about the stock right now.
|Headquarters (Founded)||New York (1978)|
|Market Cap||$1.22 billion|
|Industry||Apparel, footwear and accessories|
|Trailing-12-Month Revenue||$366.5 million|
|Management||Founder/Chairman/CEO Neil Cole
CFO Warren Clamen
|Return on Equity (Average, Past 3 Years)||10.3%|
|Cash/Debt||$231.6 million / $640.7 million|
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
This past summer, XMFElleMoran tapped Iconix as an ideal opportunity:
High margin, low-risk business trading at a reasonable price -- what more could you want? I love the business model. ... Instead of high start up costs, potential competitors are kept out because of the long tailed nature of building relationships and reputation. ... Finally, the business is highly scalable and with managements continued adeptness at acquiring new brands, profitable growth is highly likely.
Iconix even boasts a robust three-year average operating margin of 63.8%. That's much higher than that of other brand apparel plays like Gap
CAPS All-Star MagicDiligence elaborates on the bull case:
This is a compelling business model. Iconix's operations consist of acquiring brands, signing licensees that want to use the brands, coordinating and ensuring a brand image, and handling marketing for the brands. There are no manufacturing operations -- manufacturing is done by licensees. This means Iconix has no inventory, extremely low capital requirements, and very little employee overhead. This leads to extreme profitability. ...
In all, Iconix does look undervalued -- the share price has certainly trailed growth in profits and cash flows. I believe a reasonable fair value on the stock is around $25.
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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended writing covered calls in Guess?. The Fool owns shares of Guess?. Motley Fool newsletter services have recommended buying shares of and creating a diagonal call position in Nike. Try any of our Foolish newsletter services free for 30 days.