Investment Thesis Washburn University（投资理论沃什伯恩大学）.pdfVIP

Investment Thesis  Concerns regarding the Home Improvement Industry have led us to evaluate LOW which is a current stock in the Washburn University Student Investment Fund.  Even though LOW has maintained stable revenues over the past five years, Net Income, EBIT and EPS have all shown decreases since 2007. This is a large concern for the company’s future profitability.  Gross Profit margin has stayed stable over the past five years (2007-2012), but Operating Profit Margin and Net Profit Margin have both decreased since 2007. OPM dropped from roughly 10% in 2007 to 7.5% in 2012 and Net Profit Margin dropped from roughly 6% in 2007 to 4% in 2012. This illustrates a ineffectiveness of fundamentals.  Since 2009 the dividend yield has been relatively stable, but has not risen above 1.9%. Even though the dividend yield is stable, the level is lower than that desired yield for the Student Investment Fund.  The Macroeconomic call the Applied Portfolio Management class developed calls for an economic slow-down which would decrease the value of this stock. This stock has reached a level that would allow for a profitable sale. Highlights  LOW has been able to maintain a slow long term revenue growth rate of approximately 1.5%.  LOW fiscal analysis stated that Operating Profit was expected to decrease .8% to .9%. The company estimates that .8% of that decrease would be related with store closing and discontinuation of products.  LOW estimated that EPS would decrease to $1.37 from $1.40 for the fiscal year ended February 3, 2012. LOW also indicated that they estimate $.0.20 of the impact would be related to store closings and the discontinuing of products.  LOW has declared a cash dividend since becoming a public company in 1961. Macroeconomic Thesis Consumer spending has b