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Brian Wells
July 10, 2014
HIBBETT SPORTS
(NASDAQ: HIBB)
1
2
HIBBETT SPORTS
Valuation
Free
Cash
Flow
Returns
on
Capital
Growth
Share
Buy
Back
3
THE VIRTOUS CIRCLE
• 19% below 52 week high
• Fair Value $54 - $61
4
28.0
23.6
18.4
17.9
20.9
21.6
24.0
20.8
19.5
17.7
13.9
10.7
10.6
11.9
12...
5
$27
$51
$42
$65
$2
$0
$10
$20
$30
$40
$50
$60
$70
2010 2011 2012 2013 2014
In Millions of Dollars
Cap Ex
2010 – $9.6M
20...
6
RETURNS ON CAPITAL
5%
10%
15%
20%
25%
30%
35%
2010 2011 2012 2013 2014
ROIC
HIBB DKS BGFV
5%
10%
15%
20%
25%
30%
35%
201...
7
SMALL MARKET FOCUS
939 Stores in 31 States
8
COMPETETIVE OVERLAP
0%
5%
10%
15%
20%
25%
1 mile 3 miles 5 miles 10 miles
Overlap with competitors by mile radius
Source...
9
• FY 2013 – 900K shares at $49.9M
– Avg Cost Basis $55/share
• FY 2014 – 400K shares at $20.1M
– Avg Cost Basis $50/shar...
• Separate Chairman and CEO
– Chairman started in 1965 as retail clerk
• Comparable pay to competitors
• Glassdoor rating ...
11
Wonderful Company
+ Fair Price
+ Long-Term Thinking
= Outsized Returns
– Andy Cross
SOLVING FOR X
• Store Model Prototype
• Financial Highlights 1
• Financial Highlights 2
12
Appendix
13
HIBBETT STORE MODEL
Appendix
Source: Hibbett Roadshow Presentation
14
FINANCIAL HIGHLIGHTS 1
Appendix
Source: Hibbett Roadshow Presentation
15
FINANCIAL HIGHLIGHTS 2
Appendix
Source: Hibbett Roadshow Presentation
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Brian Wells Hibbett Pitch

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Foolish intern Brian Wells recently put together a slide deck on Hibbett Sports as a potential investment idea.

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Transcript of "Brian Wells Hibbett Pitch"

  1. 1. Brian Wells July 10, 2014 HIBBETT SPORTS (NASDAQ: HIBB) 1
  2. 2. 2 HIBBETT SPORTS
  3. 3. Valuation Free Cash Flow Returns on Capital Growth Share Buy Back 3 THE VIRTOUS CIRCLE
  4. 4. • 19% below 52 week high • Fair Value $54 - $61 4 28.0 23.6 18.4 17.9 20.9 21.6 24.0 20.8 19.5 17.7 13.9 10.7 10.6 11.9 12.1 13.9 12 11.9 2006 2007 2008 2009 2010 2011 2012 2013 2014 P/E EV/EBIT WHAT IS THE COMPANY WORTH?
  5. 5. 5 $27 $51 $42 $65 $2 $0 $10 $20 $30 $40 $50 $60 $70 2010 2011 2012 2013 2014 In Millions of Dollars Cap Ex 2010 – $9.6M 2011 – $10.5M 2012 – $13M 2013 – $22M 2014 – $50.5M FREE CASH FLOW
  6. 6. 6 RETURNS ON CAPITAL 5% 10% 15% 20% 25% 30% 35% 2010 2011 2012 2013 2014 ROIC HIBB DKS BGFV 5% 10% 15% 20% 25% 30% 35% 2010 2011 2012 2013 2014 ROE HIBB DKS BGFV 25% 27% 29% 31% 33% 35% 37% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Gross Margin HIBB DKS BGFV
  7. 7. 7 SMALL MARKET FOCUS 939 Stores in 31 States
  8. 8. 8 COMPETETIVE OVERLAP 0% 5% 10% 15% 20% 25% 1 mile 3 miles 5 miles 10 miles Overlap with competitors by mile radius Source: Hibbett Roadshow Presentation
  9. 9. 9 • FY 2013 – 900K shares at $49.9M – Avg Cost Basis $55/share • FY 2014 – 400K shares at $20.1M – Avg Cost Basis $50/share • All time – 12.4M shares at $343.4M – Avg Cost Basis $28/share • FY 2015 – Planned 4% SHARE REPURCHSES
  10. 10. • Separate Chairman and CEO – Chairman started in 1965 as retail clerk • Comparable pay to competitors • Glassdoor rating 3.2, CEO 66% approval • IT focus to improve efficiency • Return capital to shareholders • Conservative with debt 10 MANAGEMENT
  11. 11. 11 Wonderful Company + Fair Price + Long-Term Thinking = Outsized Returns – Andy Cross SOLVING FOR X
  12. 12. • Store Model Prototype • Financial Highlights 1 • Financial Highlights 2 12 Appendix
  13. 13. 13 HIBBETT STORE MODEL Appendix Source: Hibbett Roadshow Presentation
  14. 14. 14 FINANCIAL HIGHLIGHTS 1 Appendix Source: Hibbett Roadshow Presentation
  15. 15. 15 FINANCIAL HIGHLIGHTS 2 Appendix Source: Hibbett Roadshow Presentation
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