The sharp downtrend for HIBB cannot continue much longer. The current trend would hint at bankruptcy within 3 years, which is certainly not the case. My thinking is that the trend is about over and that we will start to see consolidation in the 12-26 range for a short time. That consolidation will move HIBB out of the downtrending channel and prepare it for a move back up to fair value, as marked by the upper rectangular area.
Following are the fair values for HIBB based on some valuation ratios I look at. These are calculated by multiplying the current stock price by the historical median value for the ratio divided by the current value. The values used can be obtained at GuruFocus.com.
P/E: 22.20*(18.75/13.03) = $31.95
P/S: 22.20*(1.25/0.48) = $57.81
Shiller P/E: 22.20*(27.84/9.69) = $63.78
P/B: 22.20*(3.93/1.33) = $65.60.
Averaging these gives a pretty conservative fair value of $54.78, a 147% profit compared to current prices. HIBB is extremely undervalued right now. It's not my favorite company, but they consistently increase revenue per share and book value per share year after year. HIBB remains a strong company, even with increasing competition from AMZN. I plan to accumulate shares of HIBB once the consolidation phase begins outside of the downtrend, probably early or mid-2019. This move may take several years to play out, so be ready to be patient. But I believe the wait is well worth it. As a quick note, the $55 valuation is only fair value. The price may go MUCH higher than fair value. But I don’t like to speculate much when trading, so once a stock returns to fair value, I’m out! I’ll leave the speculation after that to the gamblers.
Following are the fair values for HIBB based on some valuation ratios I look at. These are calculated by multiplying the current stock price by the historical median value for the ratio divided by the current value. The values used can be obtained at GuruFocus.com.
P/E: 22.20*(18.75/13.03) = $31.95
P/S: 22.20*(1.25/0.48) = $57.81
Shiller P/E: 22.20*(27.84/9.69) = $63.78
P/B: 22.20*(3.93/1.33) = $65.60.
Averaging these gives a pretty conservative fair value of $54.78, a 147% profit compared to current prices. HIBB is extremely undervalued right now. It's not my favorite company, but they consistently increase revenue per share and book value per share year after year. HIBB remains a strong company, even with increasing competition from AMZN. I plan to accumulate shares of HIBB once the consolidation phase begins outside of the downtrend, probably early or mid-2019. This move may take several years to play out, so be ready to be patient. But I believe the wait is well worth it. As a quick note, the $55 valuation is only fair value. The price may go MUCH higher than fair value. But I don’t like to speculate much when trading, so once a stock returns to fair value, I’m out! I’ll leave the speculation after that to the gamblers.