Express currently has no financial debt and $154 million in cash. This translates into a per share cash position of $2.29. We believe this should serve as a very strong inducement for investors for the following reasons:
Seeking Alpha Article
Express shares have sold off in recent weeks due to concerns about the retail sector and China-related news.
We are on the name and believe that this dip presents an attractive buying opportunity.
Although there are several risks that investors should be mindful of, we believe that shares offer a very attractive risk-reward profile.
The fact that the company has no financial debt outstanding insulates it from the liquidity problems that other retail companies have faced.
Since the company has no financial obligations or interest expenses, management has ample time to turn operational performance around and find ways to cut operating expenses.
We view the company's per share cash position as a price floor which (in theory) should minimize downside risk in the event that our thesis does not materialize.
Management has said during previous calls that it expects Express to be FCF positive in 2019, which means that there is little risk of near-term deterioration.
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