T O D ’ S S PA
CONCLUSION (2) Dividends
■ In the interim, shareholders are paid to wait. With a dividend yield of 2.46%*, Tod’s yields significantly more than the industry average of 1.68%.
Strong Balance Sheet
■ We believe that Tod’s has one of the strongest balance sheets of any firm in the luxury goods sector, contributing to our “margin of safety” and making Tod’s more attractive to potential acquirers.
■ We conclude that Tod’s is not a “Value Trap” but it requires patience as the Company restores historical
profitability and continues a targeted and disciplined expansion programme. We believe investors should be focusing on a return to former profitability levels by 2020 with a potential sale of the Company to a luxury conglomerate after that.
* As at 7 June 2018. FY2018 EBITDA forecast are analysts’ consensus forecast collected by Thomson Reuters