QRTEA (Update)

Qurate Retail Inc

Consumer


Presented:04/17/2019
Price:$16.91
Cap:$7.35B
Current Price:$0.60
Cap:$0.24B

Presented

Date04/17/2019
Price$16.91
Market Cap$7.35B
Ent Value$15.63B
P/E Ratio9.21x
Book Value$12.81
Div Yield0%
Shares O/S434.82M
Ave Daily Vol3,185,565
Short IntN/A

Current

Price$0.60
Market Cap$0.24B
Qurate Retail, Inc. engages in the business of video and on-line commerce industries. The firm's principal businesses and assets include its significant consolidated subsidiaries: QVC, Inc., Backcountry.com, Inc., Bodybuilding.com LLC, CommerceHub and Evite, Inc and its equity affiliates Expedia, Inc., HSN, Inc., FTD Companies, Inc., Interval Leisure Group, Inc. and LendingTree, Inc. Its operating segments are strategic business units that offer different products and services. They are managed separately because each segment requires different technologies, distribution channels and marketing strategies. The company was founded on March 28, 1991 and is headquartered in Englewood, CO.

Please note, this is an update to Qurate Retail Inc (QRTEB) - Long, which was first presented on 7/29/18.

Publicly traded companies mentioned herein: Amazon.com Inc (AMZN), Liberty Global (LBTYA), Qurate Retail Inc (QRTEA; QRTEB)

Highlights

The presenter is long shares of Qurate Retail (QRTEA) and sees the recent stock price weakness as a buying opportunity. Heading into the Q4 ’18 earnings release (2/27/19), QRTEA was trading in the low $20s, and the Street was looking for both continued EBITDA growth and a solid update on the HSN cost synergies, and $40MM of synergies for the full year ($16MM in the quarter). Heavy investment in performance marketing was to blame, and this raised fears/uncertainty about management’s intentions for 2019; however, the “massive” customer increase and strong FCF profile should lead to a “snapback” for the stock to the $20 level in the presenter’s opinion. Longer-term, assuming management does not “spend away the synergies,” there should be upside to $30+ based on a 10% FCF yield target (from ~20% today) and a return to the “normal Liberty [aggressive stock buyback] playbook.” Additionally, there could be optionality around the business becoming an acquisition target.

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Idea Discussion

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