American Greetings Executive Summary

In: Business and Management

Submitted By chandler38157
Words 460
Pages 2
Chandler Loupe
Oct. 13th, 2013
FIN 3717 Stephens
American Greetings- Executive Summary On a warm New Years day in Cleveland, American Greetings management was reviewing its stock’s recent downward trend of being cut in half over the past several months. When faced with situations of low equity valuation, AG’s management team normally opted to buyback; and given the circumstances, they were considering a $75 million repurchase program. As the second largest greeting card publisher, they positioned themselves as a leader in social expression products through a number of new business facets such as: electronically selling greetings, owning a number of different brands aside from AG, and licensing popular characters they owned the rights to.
Problem
The biggest issue facing the company was the overall decline in the greeting card industry. Industry analysts had concluded that their market had contracted by 9% since 2005, and that the trend would continue. The Mintel industry analyst firm had a best-case scenario of a 4% decline over the next four years, and a worst-case scenario of 16%.
Analysis
Although their market appears to be at a steady decline, their 2011 fiscal year shows a few signs of improvement. As seen in Exhibit 2, their international social expression products net sales increased by 31%, greeting cards by 9%, and gift packaging by 7%. Aside from small gains in revenue, their weighted average cost of capital has been fairly steady the past 3 years. By using the 10-year corporate bond rate (5.8%) for a BB+ company, for the cost of debt, and a cost of equity of 11.94%, the WACC for 2009-2011 is 8.35%, 8.80%, and 8.81% respectively.

Recommendation I would recommend that AG’s management reinvest the $75 million in other areas of their company/enterprise instead of repurchasing shares. With the current decline in the market for greeting cards,…...

Similar Documents

American Greetings Exec Summary

...Tyler Reames October 14, 2013 American Greetings Executive Summary – FIN 3717 Executive Summary American Greetings is the second largest greeting card publisher in the U.S., behind Hallmark. The company is involved in retail and online sales. Hallmark is the main competition for American Greetings. In recent years, social media has caused a decline in the greeting card industry. Both American Greetings and Hallmark have begun creating electronic cards to take advantage of the digital revolution. Problem By the end of 2012, American Greetings was at the bottom of its peer group, with a low EV-EBITDA multiple, market-to-book below 1, a 6x PE ratio, and a share price of $12.51 that had dropped significantly in the months prior. American Greetings has historically used a share repurchase strategy in times of low equity. This is a good defense if the stock price is down temporarily, but the low valuation could also be a sign of larger trouble where it would be wise to preserve cash. Both S&P and Value Line anticipated modest growth for American Greetings in the coming years. Analysis We conducted an analysis for 2012 through 2015 to determine the value of the company. Our analysis began with calculating the operating cash flows (OCF = operating income * (1 – 0.4) - ∆NWC): Operating Cash Flow (millions) 2011 118 2012 83 2013 86 2014 88 2015 91 Operating Cash Flow (millions) 2011 118 2012 83 2013 86 2014 88......

Words: 515 - Pages: 3

Executive Summary

...Executive Summary When you think of the discount retail industry there is no bigger name than Wal-Mart. Wal-Mart has built them into the industry leader in a very competitive market, and they continue to set the bar for every company. But as of late Wal-Mart’s sales growth rate has been slipping, which is causing a major problem for them. For the past few years Wal-Mart has grown accustom to double digit sales growth rates, but recently they have been unable to match their previous success. Now Wal-Mart is faced with the challenge of regaining the success that they once had. In order to recapture these high growth rates it is important to understand what lead Wal-Mart to these high growth rates in the first place. When analyzing Wal-Mart externally you find that its 5 forces tend to have a positive effect on the company. The company has high barriers of entry, a moderate threat of rivalry with Target and Kmart due to its expansion of super centers, and it’s...... Business strategy Business Strategy Analysis of Wal-Mart Sam Walton, a leader with an innovative vision, started his own company and made it into the leader in discount retailing that it is today. Through his savvy, and sometimes unusual, business practices, he and his associates led the company forward for thirty years. Today, four years after his death, the company is still growing steadily. Wal-Mart executives continue to rely on many of the traditional goals and philosophies that Sam's legacy left......

Words: 13234 - Pages: 53

Executive Summary

...Executive Summaries are much like any other summary in that their main goal is to provide a condensed version of the content of a longer report. Definition of Executive Summary The executive summary is usually no longer than 10% of the original document. It can be anywhere from 1-10 pages long, depending on the report's length. Executive summaries are written literally for an executive who most likely DOES NOT have the time to read the original. • Executive summaries make a recommendation • Accuracy is essential because decisions will be made based on your summary by people who have not read the original • Executive summaries frequently summarize more than one document Types of Summaries Summaries written in order to recommend a specific course of action are executive summaries. Summaries that highlight the major points of a long piece are called abstracts. The purpose of an abstract is to allow readers to decide whether or not they want to read the longer text. View our Writing Guide about Abstracts Standard summary only refers to a summary of someone else's published work and is written for a variety of purposes. View our Writing Guide about Standard Summaries Processes for Writing an Executive Summary Executive summaries are typically written for longer reports. They should not be written until after your report is finished. Before writing your summary, try: • Summarizing the major sections of your report. You might even copy text from your report into...

Words: 1544 - Pages: 7

Executive Summary

...The executive summary is often considered the most important section of a business plan. This section briefly tells your reader where your company is, where you want to take it, and why your business idea will be successful. If you are seeking financing, the executive summary is also your first opportunity to grab a potential investor’s interest. The executive summary should highlight the strengths of your overall plan and therefore be the last section you write. However, it usually appears first in your business plan document. What to Include in Your Executive Summary Below are several key points that your executive summary should include based on the stage of your business. If You Are an Established Business If you are an established business, be sure to include the following information: • The Mission Statement – This explains what your business is all about. It should be between several sentences and a paragraph. • Company Information – Include a short statement that covers when your business was formed, the names of the founders and their roles, your number of employees, and your business location(s). • Growth Highlights – Include examples of company growth, such as financial or market highlights (for example, “XYZ Firm increased profit margins and market share year-over-year since its foundation). Graphs and charts can be helpful in this section. • Your Products/Services -- Briefly describe the products or services you provide. • Financial......

Words: 422 - Pages: 2

American Greetings Executive Summary – Fin 3717

...American Greetings Exec Summary Tyler Reames October 14, 2013 American Greetings Executive Summary – FIN 3717 Executive Summary American Greetings is the second largest greeting card publisher in the U.S., behind Hallmark. The company is involved in retail and online sales. Hallmark is the main competition for American Greetings. In recent years, social media has caused a decline in the greeting card industry. Both American Greetings and Hallmark have begun creating electronic cards to take advantage of the digital revolution. Problem By the end of 2012, American Greetings was at the bottom of its peer group, with a low EV-EBITDA multiple, market-to-book below 1, a 6x PE ratio, and a share price of $12.51 that had dropped significantly in the months prior. American Greetings has historically used a share repurchase strategy in times of low equity. This is a good defense if the stock price is down temporarily, but the low valuation could also be a sign of larger trouble where it would be wise to preserve cash. Both S&P and Value Line anticipated modest growth for American Greetings in the coming years. Analysis We conducted an analysis for 2012 through 2015 to determine the value of the company. Our analysis began with calculating the operating cash flows (OCF = operating income * (1 – 0.4) - ∆NWC): Operating Cash Flow (millions) 2011 118 2012 83 2013 86 2014 88 2015 91 Operating Cash Flow (millions) 2011 118 2012 83......

Words: 346 - Pages: 2

Executive Summary

...Memorandum To: Professor H. From: V Feliciano Date: 11/27/2014 Subject: Executive Summary- “Teaching Smart People How to Learn” by Chris Argyris, Harvard Review The purpose of this summary is to explore the importance of learning in the corporate world. Much of the business success largely depends on learning; however, this resource tool has shown to be problematic for some. High commitment workers need to consider their behavior critically, identify possible ways they unintentionally contribute to the organization problems, and learn how they can solve these issues. Looping: A Defense Mechanism? In order to understand the learning process, such terms as “single loop” and “double loop” were created to understand the differences between the two. Most highly–skilled professionals are very experienced in “single loop” learning. The reason stems from the fact they have spent most of their lives obtaining academic success, mastering one or a few knowledgeable disciplines, and applying those disciplines to answer real life problems. Whereas “double loop” learning explores other opportunities to resolve a problem with a shared perspective all while leaving bias thoughts and opinions out of the equation. These facts alone help explain why workers are horrible at double-loop learning. Because many workers are almost always successful, they rarely experience disappointment. Therefore they act defensive, disregard criticism, and place the blame on others but......

Words: 757 - Pages: 4

Executive Summary

...What effect does consequences have on improving student behavior in the general education classroom? Darrell Brown AMBA 600 9043 MBA Fundamentals (2148) Professor Masi November 11, 2014 Executive Summary Research shows that meaningful consequences can help improve student behavior in the general education classroom. This paper discusses the effects of consequences on improving student behavior. More specifically it discuses two behavior management programs, the checkbook approach and consequence maps. The checkbook approach allows students to take ownership of their actions by allowing them to be an active part in choosing the rules, rewards, and consequences used in helping them perform better. This behavior management program ensures student motivation. It models real life situations and students are allowed to earn and buy rewards. The consequence map gives the student a graphic representation of behaviors and consequences. It depicts the current, undesirable behavior and an alternate behavior along with the consequences that goes along with each option. With the use of either method, educators are likely to see and improvement in student behavior in the general education classroom. B. F. Skinner was an American psychologist and behaviorist who invented the idea of operant conditioning. Skinner says that people do not just develop behaviors, but they release them as well and that our behaviors operate on our environment, which......

Words: 1479 - Pages: 6

American Greetings Case

...TENTANG AMERICAN GREETINGS Pada awal tahun 2012, suhu udara vukup hangat di Claveland, Ohio, kantor pusat American Greeting. Tetapi, sekalipun suhu udara mulai menghangat, harga saham American greeting mengalami penurunan. Dalam beberapa bulan terakhir, harga pasar saham perusahaan ini mengamali penurunan hingga di level $12.51. Manajemen American Greeting berencana untuk melakukan share buyback. Dengan current valuation, manajemen berencana untuk membeli ssaham mereka kembali dengan total pembelian sebesar $75. 000.000. keputusan yang diambil bergantung pada expected masa yang akan datang. Hallmark adalah kompetisi utama untuk American Greetings. Dalam beberapa tahun terakhir, media sosial telah memberitakan penurunan dalam industri kartu ucapan. Kedua American Greetings dan Hallmark telah mulai membuat kartu elektronik untuk mengambil keuntungan dari revolusi digital. Pada akhir 2012, American Greetings berada di bawah kelompok yang sama, dengan kelipatan rendah EV-EBITDA, market-to-book di bawah 1, rasio 6x PE, dan harga saham dari $ 12,51 yang telah turun secara signifikan dalam bulan sebelumnya. American Greetings secara historis menggunakan strategi pembelian kembali saham pada saat ekuitas rendah. Ini adalah cara yang baik jika harga saham turun sementara, tetapi valuasi rendah juga bisa menjadi tanda dari masalah yang lebih besar di mana akan lebih baik untuk menggunakan cash. Kedua S & P dan Value Line mengantisipasi pertumbuhan moderat untuk American......

Words: 724 - Pages: 3

Executive Summary

...An executive summary summarizes, or reviews the main points of, a longer document or report for a reader that does not have time to read the entire report. An effective executive summary analyzes and summarizes the most important points in the paper or report, and will often make a recommendation based on the analysis. Executive summaries are “stand alone” documents that are almost always read independently of the reports they summarize. When preparing to write an executive summary, ask yourself the following questions: * Who will read your executive summary? Sometimes your executive summary may have an “intended” audience: your professor might require you to write it for a CEO, department head, or supervisor, for example. On other assignments, your audience won’t have a specific identity, but always keep in mind that the reader of an executive summary needs to know all of the important information in the main document without reading the actual document. Even if you know that your instructor will be reading everything that you submit, write the executive summary as a “stand alone” document. * What is the main document’s main topic, theme, or idea? Most reports have a “thesis” or central point that they are seeking to communicate. Try to sum this up in two or three sentences. If you are having trouble with this, imagine that someone has asked you, “what’s this report about?” and that you have to explain it in only a few sentences. Once you’re able to say what the......

Words: 2824 - Pages: 12

Executive Summary

...COMPANY OVERVIEW Owner(s): bill Bowerman and Phil Knight Company Name: Nike. Inc Product Name: Athletic footwear and apparel, sport equipments and other athletic and recreational products Location: Washington County, Oregon, United States (Near Beaverton, Oregon) History (yrs.): SECTION 1: EXECUTIVE SUMMARY is an American multinational corporation that is engaged in the design, development, manufacturing and worldwide marketing and sales of footwear, apparel, equipment, accessories and services. The company is headquartered near Beaverton, Oregon, in the Portland metropolitan area. It is one of the world's largest suppliers of athletic shoes and apparel[5] and a major manufacturer of sports equipment, with revenue in excess of US$24.1 billion in its fiscal year 2012 (ending May 31, 2012). Nike, Inc. (NYSE: NKE), headquartered in Beaverton, Oregon, is the largest and most successful brand of shoes, sports equipment, clothing, and controlling more than 60% of the market and becoming a pop culture icon.Athletic footwear and apparel, sport equipments and other athletic and recreational products. The company was founded on January 25, 1964, as Blue Ribbon Sports, by Bill Bowerman and Phil Knight,[1] and officially became Nike, Inc. on May 30, 1971Nike sponsors many high-profile athletes and sports teams around the world, with the highly recognized trademarks of "Just Do It" and the Swoosh logo.. Provide a detailed description of your company. Nike promotes its......

Words: 631 - Pages: 3

American Greetings

...American Greetings Question 1: The shares of American Greetings are currently trading at an EBITDA multiple that is at the bottom of its peer group. Do you think a 3.5 times multiple is appropriate for American Greetings? If not, what multiple of EBITDA do you think is justified? What is the implied share price that corresponds to that multiple? * First I calculated the market value of common equity by multiplying the share price to the shares outstanding. * And to get the Enterprise Value, I added MV of common equity and total debt, then subtracting total cash. * Lastly, I divided enterprise value from EBITDA to achieve my multiple. * Therefore, multiple of 3.5 is fair for American Greetings. Question 2: Please model cash flows for American Greetings for fiscal years 2012 through 2015. Using a marginal tax rate of 40% and a market risk premium of 5%, what is your estimate of the appropriate discount rate for the free cash flow forecast? Based on a discounted cash flow model, what is your best estimate of the implied enterprise value of American Greetings and the corresponding share price? * American Greetings’ sales growth would be steady at 1.5% and their operating margin would be maintained at 8%. With a discount rate of 8.49%, the present value of the company is $1041 and has a stock price of $20.94. Question 3: What are THE KEY DRIVERS OF VALUE IN YOUR MODEL * The key drivers of value in my models are the free cash flow forecasts, the......

Words: 371 - Pages: 2

Executive Summary

...SAMPLE EXECUTIVE SUMMARY PipeDream.com Retail Application Services This document was prepared by: eStrategyPartners.com "Business Solutions for eCommerce" The "Digital Coast's" leading ebusiness consulting firm, established on the belief that there is a critical need for objective and creative analyses of the strategic possibilities of eCommerce and Internet technology. eStrategy Partners provides both the strategic expertise of traditional management consulting firms and the technical planning capability and accountability of Internet professional service firms. "eStrategy" -- the identification, design and implementation of business solutions for eCommerce. Pipedream.com 04/03/00 Proprietary and Confidential Pipedream.com – Retail Application Services Executive Summary Opportunity Competition between online etailers for customers is at an all time high. However, most etailers mirror traditional brick-and-motor business models: open a store, drive traffic to it, and hope for sales, while failing to take advantage of the Web’s ability to create networks of consumers through online communities, content, and partnerships. The Concept Pipedream.com has created a new weapon in the retailer’s arsenal of strategic partnerships turning single consumers into networks of consumers. Recognizing this market need, Pipedream.com has developed a service that will greatly improve how Internet retailers entertain and service its customers. Integrating services and......

Words: 1527 - Pages: 7

Executive Summary

...Complexia® Executive Summary Breast cancer is one of the leading causes of death for women worldwide (American Cancer Society website, cancer.org). According to the Susan G. Komen Breast Cancer Foundation (ww5.komen.org), in 2012, there were 1.7 million newly diagnosed cases of breast cancer. Komen predicts in the United States alone, nearly 235,000 cases of breast cancer will be diagnosed, 99% of which will be in women. In addition to newly diagnosed cases, breast cancer has a high rate of recurrence. Eleven percent of patients will see a return of their cancer within 5 years; twenty percent within ten years (Brewster, et al. 2008). This means one out of five breast cancer patients will suffer a recurrence. Worldwide, 340,000 patients will suffer a recurrence. Araba has developed a revolutionary drug, Complexia®, which has been proven in clinical trials to reduce the rate of recurrence in breast cancer patients. This new formula has the potential to save thousands of lives each year. Jackson Pharma, Inc. (“JP”) has been selected to be the exclusive distributor of Complexia®. This opportunity directly correlates to our Mission Statement: “Jackson Pharma, Inc. will improve and extend lives through distributing life-saving medications to patients whose physicians prescribe them.” JP has chosen Shipping, Inc. as its exclusive supplier of refrigerated casing product, designed specifically for Complexia®. JP will work closely with Shipping, Inc. to......

Words: 492 - Pages: 2

Executive Summary

...Macy’s: Executive Summary Macy’s, Inc. Macy’s, Inc. is known as the one of the leading retail corporations worldwide. It offers its customers a wide range of products including clothing, footwear, jewelry, beauty products, and even home décor. Macy’s has opened more than 800 stores across the U.S. and reported fiscal year (FY) 2009 sales of $23.5 billion. Although Macy’s is a prominent retailer today, their success had to start somewhere. In this summary we will take a glance at Macy’s history as well as their prior and current financial information. Brief History of Macy’s, Inc. Before Macy’s, Inc became a household name Rowland H. Macy, the founder of Macy’s Inc., started a dry-goods store in 1851 in Haverhill, Massachusetts where he made $11.06 on its first day. Since then, R.H. went through his share of retail failures and various store relocations. It was not until 1877, when R.H. Macy & Co. started accumulating its high sales, that it made its mark as a retail giant. For example, Macy’s made business history when they were the first to promote a woman in an executive position. Macy’s was also the first to hire an in-store Santa Claus. In 1924, upon the completion of the new 7th Avenue addition, Macy’s Herald Square became known as the “World’s Largest Store” with more than one million square feet (Macy’s, Inc., 2010). In addition, the company also produces their annual Macy’s Thanksgiving Day Parade and Fourth of July fireworks display that fills the hearts...

Words: 1585 - Pages: 7

Executive Summary – American Rehabilitation Centers & South Beach Health Partners

...Executive Summary – American Rehabilitation Centers American Rehabilitation Centers (ARC) is a leading provider of outpatient rehabilitative services. Their strategic goal is to use noninvasive treatments to lower direct costs and reduce recovery time to each patient. The company is looking to expand into sports medicine as it is a rapidly growing field, this case study is to examine two business opportunities to see which would be the better option given their goal. Proposal A is for one single large investment. Proposal B is a staged entry that would take place in two stages. Proposal A is for one single investment, ARC would purchase 500 facilities across the nation. Each facility would be renovated and fully equipped to open as a new facility specializing in sports medicine. The estimated average cost per facility is $800,000, since ARC would be purchasing 500 the total estimated cost is $400 million, internal rate of return 20-25%. This investment requires a greater initial investment but Proposal B is more costly throughout the project. There are several considerations to be made; first if they were to invest in this project ARC would have better pricing for construction, marketing etc. due to the size of the project. As well as they would have a nationwide uniform product this would give ARC name recognition and potentially more clients. On the negative side, this project does require a large amount of capital initially and the risk involved is uncertain. The......

Words: 1220 - Pages: 5