Jarden Corporation - University of Oregon Investment Group

October 28, 2011
Consumer Goods
Jarden Corporation
Ticker: JAH
Current Price: $33.08
Recommendation: Buy
Implied Price: $43.76
Investment Thesis
Key Statistics
52 Week Price Range
50-Day Moving Average
$25.60 - $37.50
$XX$XX.XX
$29.93
Estimated Beta
1.49
Dividend Yield
1.1%
Market Capitalization
3-Year Revenue CAGR
3.81%
Diluted
Shares Outstanding

88.6 million
Average Volume (3-Month)
825 thousand
Insider Ownership
92.30%
5.59%
Margins and Ratios
EV/EBITDA
7.74x
Gross Margin
30.34%
EBITDA Margin
11.10%
Net Margin
Debt to Enterprise Value
Leverage Ratio
Covering Analyst: David Douglas
Jarden Corporation owns more than 100 major brand name products with
the majority owning market leading positions. These brands should
continue to gain market share and generate strong sales for Jarden.

Jarden should continue to be able to grow margins, resulting in considerable
increases in cash flows.

With only 30% of Jarden’s sales outside of North America, the company is
beginning to expand into Asia, and Latin America, presenting major
revenue growth opportunities.

The market is considerably undervaluing Jarden’s brands and growth
opportunities, presenting a buying opportunity at well beneath their intrinsic
value.
$3.03 billion
Trading Statistics
Institutional Ownership

3.42%
56.76%
4.47x
University of Oregon Investment Group
October 28, 2011
Business Overview
Jarden Corporation was originally formed as a canning business, spun off from
the Ball Corporation in 1993. The company operated under the name Alltrista
from 1993 to 2002. Over this time, Alltrista made multiple acquisitions,
expanding its operating segments from only canning to household, outdoor, and
many other consumer goods products. In 2002, Alltrista was renamed Jarden
Corporation. Based in New York, Jarden employs more than 25,000 workers
across the globe, serving customers in more than 100 countries. The company
operates under four main business segments:
Outdoor Solutions (41% of Revenue)
The outdoor solutions segment manufactures and sells goods and equipment for
outdoor related activities. One of their largest brands in this segment is
Coleman, which makes goods such as air beds, camping stoves, tents, water
recreation products, and other camping supplies. Jarden also produces team
sports equipment for baseball, softball, football, basketball, and many others.
Their largest athletic brands in this segment are Rawlings and Worth. Outdoor
solutions also include a wide range of skiing, snowboarding, and in-skating
products, with the most significant brand being K2. Other products produced
under this segment include fishing equipment, inflatable air beds, and outdoor
apparel. These products are sold primarily to mass merchandisers and specialty
stores.
Consumer Solutions (31% of Revenue)
The consumer solutions segment produces primarily household goods and
appliances. Products in this segment include food vacuum packaging, personal
care and wellness products, coffeemakers, kitchenware, and other household
appliances. The most notable brands in this segment include FoodSaver, Mr.
Coffee, Oster, Crock-Pot, and Sunbeam. These products are sold primarily to
mass merchandisers and department stores.
Branded Consumables (22% of Revenue)
Process Solutions
6%
Segment Sales
Branded
Consumables
22%
Consumer
Solutions
31%
Outdoor
Solutions
41%
The branded consumables segment offers a wide variety of branded consumer
products. Products in this segment include home canning jars and accessories,
home safety products, baby care products, health care products, playing cards,
rope, fire logs, and storage organizers. The most notable brands in this segment
are from their canning jars and accessories category, Ball and Kerr. They are
also the largest playing card manufacturer in the world, operating under the
Aviator, Bicycle, and Bee brand names. Jarden’s First Alert home security and
fire alarm products are recognized as the market leader in fire and carbon
dioxide alarm systems. Branded consumables are sold primarily through mass
merchandisers, grocery, and drug stores.
Process Solutions (5% of Revenue)
The process solutions segment manufactures and distributes a variety of plastic
products for closures, contact lens packaging, medical disposables, plastic
cutlery, and other rigid packaging. Many of these products are used in the
production of other consumer goods. This segment also produces nylon
polymers, conductive fibers, and other materials used in paper product, weed
trimmer cutting line, and fiberglass antennas. A significant revenue source for
this segment is the U.S. and Canadian mints, where Jarden is one of the only
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suppliers of copper plated zinc penny blanks. They also sell copper, bronze, and
steel currency plates to other international governments.
Strategic Positioning
Production
One of Jarden’s key strengths is their ability to maintain their gross margins.
They have been able to do this by strategically locating their manufacturing
facilities throughout the world. Currently, only 30% of Jarden’s goods are
manufactured within the United States. By utilizing manufacturing facilities in
China and Latin America, Jarden has been able to take advantage of lower labor
costs that significantly contribute to a higher gross margin.
Major Customers
One of Jarden’s major strengths is their ability to get their products sold in major
retail chains. By having so many brands with market leading positions, Jarden is
easily able to get their products sold in mass retail chains. Some of Jarden’s
notable customers include Bed Bath and Beyond, Costco, Dick’s Sporting
Goods, The Home Depot, Kroger, Lowe’s, Target, and Wal-Mart. As of 2010,
Wal-Mart was Jarden’s largest customer, accounting for 21% of their annual
sales. Though their reliance on Wal-Mart may be seen as a weakness, it is
important for Jarden to continue to get their products placed in large retail
chains. Large stores like Wal-Mart tend to favor companies with recognizable
brands that can quickly fill orders.
Niche Markets
Jarden’s fundamental strengths come from having highly recognizable brands
that are market leaders in their respectable segments. To do this, Jarden has
focused on producing products geared towards niche markets. A niche market is
a subset of a broader market that focuses on a much more specific product. An
example of one of Jarden’s niche markets is playing cards. The playing card
industry is characterized by mainly highly popular brand names and having a
relatively low degree of competition. Jarden focuses on these niche markets in
which have a very specific customer type. By already having leading products in
specific niche markets, it is much easier for Jarden to increase market share with
less investment. Niche markets tend to favor the highest market share as
customers lean towards the most recognizable brand names. The majority of
Jarden’s products are the leaders in their respective niches and should allow the
company to continue to build upon an already high market share.
Business Growth Strategies
One of Jarden’s top priorities is to maintain a wide variety of consumer goods
products that all maintain a high market share. In order to do this, they are
relying on four main growth strategies:
Invest in Leading Brands
The majority of Jarden’s success has been brought about because of their wellknown brands that have high market shares. Jarden is currently the market
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leader in skis and bindings, snowboards, baseball and softball equipment,
fishing rods, reels, and line, home canning products, and many other niche
markets. The company believes that if they continue to invest in the
development and marketing of their leading brands, it will allow them to
continue to grow and maintain a high market share in each of their market
segments.
Expanding Market Share in Niche Markets
One of Jarden’s major strategies is to sell consumer goods in smaller niche
markets. Jarden faces very little competition in these smaller markets and is able
to maintain a high market share mainly because they can leverage economics of
scale. New products and acquisitions will be focused on these smaller market
segments where they believe they can immediately be one of the top brands
being sold.
International Expansion
Other
5%
2010 Sales by Region
Europe
17%
Latin
America
8%
Canada
6%
United
States
64%
Currently, only 30% of Jarden’s sales come from outside of North America.
Management has stated that one of their key goals moving forward is to increase
sales internationally. In 2010, Jarden began selling products from their consumer
solutions segment in Brazil and India. This is some of their first major exposer
to emerging markets and they plan to roll out more of their products in these
areas within the next few years. Also in 2010, Jarden acquired Mapa Spontex,
giving them multiple well recognized brands that are at the top of their markets
in areas of Europe, Argentina, and Brazil. Jarden has significant opportunities to
expand their sales operations into emerging economies in Asia and Latin
America.
Acquisitions
Jarden’s primary business growth has come through acquisitions. With a focus
on niche markets, it is much harder for a company to enter with a brand new
product than it is to acquire a leading brand. The types of acquisitions Jarden
will look for are consumer goods companies, selling to a niche market, with a
well-known brand name. Jarden is willing to invest in a well-known brand but
not one in which it will take a sizeable effort to develop and market.
Acquisitions
Jarden has relied primarily on acquisitions to expand their business. The
following are some of the major and more recent acquisitions Jarden has made:




American Household, Inc. (2005)
K2 Sports (2007)
Mapa Spontex (2010)
Aero Products International, Inc. (2010)
American Household, Inc. owned various household and outdoor products.
Notable brands include Coleman, First Alert, Sunbeam, Oster, and Mr. Coffee.
This acquisition has helped Jarden grow its outdoor solutions segment
considerably with the success of the Coleman outdoor brand. It also increased
their product offering in the consumer solutions segment, with the Oster,
Sunbeam, and Mr. Coffee kitchen appliances. This acquisition was worth
roughly $845 million.
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K2 Sports was the largest acquisition Jarden has made in the history of the
company. K2 manufactures and sells athletic shoes, apparel, sports equipment,
and other accessories. K2 owned several well-known brands including K2,
Adio, Marmot, Penn, Rawlings, Shakespeare, and Milken Sports. This
acquisition helped outdoor solutions become Jarden’s largest operating segment.
The total value of the acquisition was roughly $1.2 billion.
Mapa Spontex is a manufacturer of baby care and home care products. They are
the world’s largest manufacturer of protective gloves, especially used in the
chemical industry. Mapa’s brands have leading market positions in Argentina,
Brazil, and areas of Europe. This acquisition should help increase Jarden’s
international exposure and increase help grow the consumer solutions segment.
The total value of this acquisition is roughly $415 million.
Aero Product International manufactures air filled mattresses under the brand
names Aero, Aerobed, and Aero Sport. This acquisition is included in the
outdoor solutions segment and will be tucked in to the Coleman brand. This
acquisition is valued at roughly $150 million.
Industry
Jarden does not operate in one single industry. As they are focused in niche
markets, they operate in small segments of many different industries. One of the
main industry sub-segments they operate in is Housewares and Specialties. This
sub-industry focuses primarily on smaller kitchen appliances. This segment has
grown at a compound annual growth rate (CAGR) of roughly 2% in the past five
years. This growth is expected to accelerate in the coming years as developing
markets grow and demand increases for these types of goods.
Venezuelan Inflation
35.00%
30.00%
25.00%
20.00%
15.00%
Inflation
10.00%
Jarden also operates in the Athletic and Sporting Goods Manufacturing industry.
Companies in this industry produce various athletic, fishing, camping, and
hunting equipment. Revenues in this industry are highly correlated with retail
stores. Competition in this industry is highly concentrated and continues to
shrink. Large companies have benefited from consumers favoring the most
recognizable brands and it is difficult for smaller firms to take market share
from these brands. The overall industry is expected to grow at a CAGR of
roughly 1-2% through 2015.
5.00%
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
0.00%
The overall consumer goods industry relies heavily on the global economy. As
global production increases or slows, consumer goods manufacturers are heavily
affected. The majority of the goods in this segment can be considered
discretionary and as the economy slows, these are usually the first types of
goods to see demand slow.
Consumer goods manufacturers are also heavily affected by changes in
commodity prices. Most companies produce their products abroad and changes
in oil prices can cut into margins. These companies also use raw materials such
as aluminum, copper, plastics, gasses, and steel. Without long term purchase
contracts on these goods, any change in price can also cut into gross margins.
These manufacturers are also face currency fluctuation risk. Most of these
companies produce their products in Asia and Latin America. A significant risk
to this industry is a major currency appreciation in China relative to the dollar. If
China was to allow their currency to appreciate, this would significantly increase
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labor costs. There have also been issues with Venezuela. Between 2009 and
2010 Venezuela was designated a hyper-inflationary economy. Many consumer
goods companies had significant manufacturing facilities and cash balances in
this economy, which led to large charges against earnings.
Management
Martin E. Franklin-Executive Chairman
Mr. Franklin was appointed Chief Executive Office and Executive Chairman in
2001. Today he serves as Executive Chairman, overseeing the corporate strategy
of the company. He has served as either Executive Chairman or CEO at Benson
Eyecare, Lumen Technologies, and Bolle, Inc. before joining Jarden. Under his
leadership, Jarden grew from $300 million to over $6 billion in sales and the
stock price has increased over 1000%.
In 2010, Mr. Franklin earned a base salary of $2,034,728, with a bonus of
$2,034,728. He also earned over $7 million in stock awards for a total salary of
$13,718,231. Mr. Franklin owns about 3.9% of Jarden’s stock, with a total of 3.4
million shares.
James E. Lillie-Chief Executive Officer
Mr. Lillie joined the company in 2003 as the Chief Operating Officer. He was
appointed Chief Executive Officer in 2011. Before Jarden, he was Vice
President of Operations at Walter Industries, and held various senior level
management positions at World Color, Inc. During his time at Jarden, Mr. Lillie
has overseen day to day operations of each of Jarden’s operating segments.
In 2010, Mr. Lillie earned a base salary of $748,475, with a bonus of $750,000.
He also earned roughly $1.2 million in stock based awards. His overall salary in
2010 was $3,536,981. Mr. Lillie owns 467,828 shares of Jarden.
Ian Ashken-Vice Chairman and Chief Financial Officer
In 2001, Mr. Ashken was appointed to Jarden’s Board of Directors, as well as
named Vice Chairman and Chief Financial Officer. Before Jarden, he served as
Vice Chairman and/or CFO of Benson Eyecare, Lumen Technologies, and
Bolle, Inc. At Jarden, Mr. Ashken has been in charge of the company’s
financial position as well as overseen all major acquisitions.
In 2010, Mr. Ashkem earned a base salary of $939,105 with a bonus of
$939,105. He also earned over $2.9 million in stock based awards, with a total
2010 salary of $6,035,152. Mr. Ashken owns about 1.1% of Jarden’s stock,
with 948,456 shares.
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Recent News
“Jarden Q3 beats market expectations” 10/26/2011
-Reuters
Jarden reported earnings of $1.18 per share versus consensus estimates of $1.10
per share. This was primarily driven by higher than expected revenue growth,
mainly coming from their outdoor solutions segment as many outdoor stores
make their winter purchases for winter goods during the 3 rd quarter. The
company is also seeing double digit growth in their Marmot brand and will
begin rolling out retail stores during 2012.
“Jarden Locks in Low Copper Prices” 9/29/2011
-WSJ
After copper prices dropped over 20%, Jarden made the decision to make a
significant purchase of forward contracts on copper. This is important as copper
is one of the significant inputs to Jarden’s assortment of products. The company
relies on many different commodities and any opportunity they see to lock in
contracts on highly volatile commodities allows them to hedge away some of
their commodity risks.
Jarden Q2 beats on demand for camping, sporting goods” 7/27/2011
-Reuters
Jarden recorded earnings of $0.89 per share versus estimates of $0.88 per share.
Earnings were primarily driven by an 11% sales increase in their outdoor
products segment. The company has seen a steady increase in demand for their
Coleman brands of various camping equipment. The 2 nd quarter also
traditionally benefited from their sporting goods segment as the baseball and
softball season begins.
Catalysts
Upside




Better than expected margin growth.
Successful introduction of Marmot retail stores.
Better than expected economic recovery.
Any significant international growth.
Downside



Weakened expectations of consumer spending.
Loss of any significant retail customers.
Major currency fluctuations in manufacturing countries.
Comparable Analysis
A comparable analysis was performed in order to find the price Jarden should be
trading at in relation to its peer group. To be accurate, this type of analysis
involves choosing companies that are similar in risk and return. The companies
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chosen were done so based on similar expected growth rates, risk, and product
offerings.
Multiple
EV/Revenue
EV/EBIT
EV/EBITDA
Price Target
Current Price
Undervalued
Implied Price
Weight
49.83
20.00%
45.64
40.00%
41.93
40.00%
$45.00
33.08
36.02%
Choosing comparable companies for Jarden was very difficult due to the fact
they operate across multiple industries. Companies were mainly chosen if they
offered a somewhat diverse product portfolio of different consumer goods
products. Expected growth rates were then looked at to make sure they were
similar to Jarden.
The multiples chosen to value Jarden relative to its peers were EV/Revenue,
EV/EBIT, and EV/EBITDA. The two bottom line multiples were given a higher
weighting due to the fact that they are a better indicator of the company’s cash
flows.
Newell Rubbermaid
“Newell Rubbermaid Inc. is a global marketer of consumer and commercial
products. Newell Rubbermaid’s products are marketed under a portfolio of
brands, including Rubbermaid, Graco, Aprica, Levolor, Calphalon, Goody,
Sharpie, Paper Mate, Dymo, Parker, Waterman, Irwin, Lenox and Technical
Concepts. The Company’s multi-product offering consists of consumer and
commercial products in three business segments: Home & Family; Office
Products, and Tools, Hardware & Commercial Products.” -Reuters
Newell Rubbermaid was chosen because of their diverse range of consumer
good products and similar size. The company also is expected to have similar
revenue and EBITDA growth to Jarden. They are also similar in size to Jarden.
Newell is one of the most similar companies to Jarden and therefore is weighted
at 40%.
Tupperware Brands
“Tupperware Brands Corporation is a direct seller of products across multiple
brands and categories. Product brands and categories include design-centric
preparation, storage and serving solutions for the kitchen and home through the
Tupperware brand, and beauty and personal care products through its Armand
Dupree, Avroy Shlain, BeautiControl, Fuller, NaturCare, Nutrimetics and Nuvo
brands. The Company is a global direct selling consumer products company,
engaged in the manufacture and sale of Tupperware products and cosmetics and
personal care products under a range of trade names. Each business
manufactures and/or markets a range of products.” –Reuters
Tupperware Brands was chosen for their diverse range of consumer goods
products under a wide variety of brand names. They are also expected to have
similar top line growth to Jarden. Tupperware Brands though has higher margins
and a much different capital structure; therefore they were weighted lower then
Newell at 25%.
Spectrum Brands
“Spectrum Brands Holdings, Inc. is a global branded consumer products
company. Its product categories include consumer batteries; small appliances;
pet supplies; electric shaving and grooming; electric personal care; portable
lighting; and home and garden control products. The Company has four
segments: Global Batteries & Personal Care, which consists of its worldwide
battery, shaving and grooming, personal care and portable lighting business;
Global Pet Supplies, which consists of its worldwide pet supplies business; the
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Home and Garden Business, which consists of its home and garden control
product offerings, including household insecticides, repellants and herbicides,
and Small Appliances, which consists of small electrical appliances primarily in
the kitchen and home product categories. It manufactures and markets alkaline,
zinc carbon and hearing aid batteries, herbicides, insecticides and repellants and
specialty pet supplies.” –Reuters
Spectrum Brands was chosen because of their diverse consumer product mix,
with highly recognizable brands names. Spectrum also is similar to Jarden in
capital structure and size. However, Spectrum makes a significant portion of
their profits from outside of the United States, significantly more than Jarden.
Spectrum Brands is weighted at 25%.
Helen of Tory Limited
“Helen of Troy Limited, incorporated in 1968, is a global designer, developer,
importer and distributor of an expanding portfolio of brand-name consumer
products. The Company has three segments: Personal Care, Housewares and
Healthcare / Home Environment. Personal Care product category includes retail
and professional appliances and accessories, and grooming, skin care and hair
care solutions. Healthcare / Home Environment product category includes
healthcare and home environment.” -Reuters
Helen of Troy Limited was chosen because of their diverse product portfolio of
consumer goods products. They are also expected have similar revenue growth
to Jarden. This company though is much smaller than Jarden and does not have
many highly recognizable brands. For these reasons, Helen of Troy is only
weighted at 10%.
Discounted Cash Flow Analysis
To complete the discounted cash flow analysis, revenues were projected, and
then the percent of revenue method was used to project line items. Projections
were based on management guidance, analyst expectations, and my analysis of
the company moving forward.
Revenue
To project revenues I used a combination of management’s guidance and my
expectations for growth. Management has indicated they expect 3-5% organic
growth over the next five years. They are also expecting 2-5% growth coming
from acquisitions. Revenues were broken apart by each of their operating
segments, and year over year growth was projected for each. Outdoor solutions
were projected with the highest growth rate as this is where they have seen the
most success in recent years and it is the segment management seems to be
spending the most effort on expanding. Other segments will only see moderate
to low growth, which is then trended down over the life of the DCF. The effect
of acquisitions I mainly accounted for in the Outdoor Solutions and Consumer
Solutions, where acquisitions are most likely to occur.
Cost of Goods Sold
-Jarden Corp Presentation
Cost of Goods Sold at Jarden consists of the costs of raw materials and finished
goods purchased, as well as manufacturing, warehouse, transportation, and
distribution costs. Management expects that they will be able to reduce COGS
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by around 50 basis points per year for the next five years. Given the volatility of
their raw materials, I am more conservative in my projections, with Jarden only
increasing margins by about 2% by the terminal year. The initial increase is the
gross margin in 2012 is mainly due to an expected price increase in Jarden’s
products.
Selling, General, and Administrative
Other
5%
Cost of Good Sold
Warehouse/Dis
tribution
7%
Manufactured
Product
43%
Sourced
Product
45%
Selling, General, and Administrative expenses at Jarden include marketing,
product development, and other administrative costs. These costs are projected
to stay high in the first years of the DCF as the company is expecting to spend
more in marketing and investing in their outdoor segment. These costs are then
trended down as Jarden is able to use synergies from acquisitions to lower
overall administrative costs.
Depreciation and Amortization
Depreciation and Amortization was projected using a straight-line depreciation
schedule. One hundred percent of capital expenditures and fifty percent of
acquisitions were depreciated.
Capital Expenditures
Capital expenditures are expected to remain relatively constant and fall over the
last years of the DCF. This is for the fact that as they continue to make
acquisitions, they will need to make less in expenditures to meet their operating
and expansion needs.
Acquisitions
Acquisitions have been the key driver of expansion for Jarden throughout the
life of the company. It is difficult though to project exact acquisitions as they
have varied from year to year. Though it is unlikely for Jarden to make an
acquisition every year, projections are normalized as 2% of total revenue
starting in 2012. I do not see any major acquisitions occurring so 2% represents
a relatively large sized nominal acquisition each year.
Net Working Capital
Jarden Corporation Beta
Type
Beta Weigting
5 Year Monthly
1.53
33%
5 Year Hamada
1.99
0%
5 Year Vasicek
1.53
0%
3 Year Monthly
1.74
33%
1 Year Weekly
1.20
33%
1 Year Hamada
1.20
0%
1 Year Vasicek
1.18
0%
No major changes were made to the working capital model except for a couple
of line items. Management has stated they expected to increase their cash
balance over the next years so this item is trended upwards a percentage of
revenue. Also, as acquisitions are made, inventories will build up to a larger
percentage of revenue, as well as see an increase in accounts receivables.
Accounts payable and long term debt are both trended upwards as management
expects both these items to increase as acquisitions are made and debt expires.
Other line items are trended to historical averages.
Discounted Cash Flow Assumptions
Beta
Seven different betas were calculated for Jarden. I chose to use an equally
weighted average between a 5 year monthly, 3 year monthly, and 1 year weekly
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betas. I believe this beta best reflects the risk Jarden has faced over the past five
years and how it will behave in the future. Though I also calculated a Hamada
and Vasicek for each of the three time periods, I chose not to include these
because of differences in the peer group. Without real pure play competitors or
being in a specific Undervalued/(Overvalued)
industry, determining an industry beta will not give the best
Terminal Growth Rate
reflection of Jarden.
Implied Price
Adjusted Beta
Terminal Growth Rate
43
2.0%
2.5%
3.0%
3.5%
4.0%
1.29
43.80
49.77
57.17
66.56
78.87
1.39
38.49
43.56
49.75
57.46
67.34
1.49
33.81
38.16
43.39
49.80
57.87
1.59
29.67
33.42
37.88
43.28
49.95
1.69
25.98
29.23
33.07
37.66
43.25
Tax Rate
The high tax rate for Jarden in recent years has been due primarily to
hyperinflationary issues in Venezuela. The SEC released guidelines on how to
deal with the hyperinflation and it included non-deductible charges to the
income statement. Management expects the long term tax rate to be around
35.5%. The tax rate used in the DCF is trended down from the expected 2011
rate to the long term rate.
Discounted Free Cash Flow Assumptions
Tax Rate
Risk Free Rate
Beta
Market Risk Premium
35.50% Terminal Growth Rate
2.18% Terminal Value
1.49 PV of Terminal Value
7.00% Sum of PV Free Cash Flows
Considerations
3.00%
10,834
4,764
2,100
% Equity
49.14% Firm Value
6,864
% Debt
50.86% Total Debt
3,034
Cost of Debt
5.19% Cash & Cash Equivalents
CAPM
12.63% Market Capitalization
WACC
7.91% Fully Diluted Shares
Terminal WACC
8.35% Implied Price
Cost of Debt
A weighted average of the bonds and long-term debt of Jarden was used. The
current yield to maturity was then used as the cost of debt moving forward.
495
2,931
89
Risk Free Rate
43.23
Current Price
33.08
Undervalued
30.68%
A 10-year treasury rate was used as the risk-free rate over the course of the
DCF. However, the terminal WACC is calculated using a risk-free rate based on
the 30-year treasury rate. Given the difference between the 10 and 30 year risk
free rates, the rate chosen should reflect the time period being discounted.
Therefore, the terminal year should be discounted using a longer period risk-free
rate.
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Recommendation
Recommendation
Comparables Analysis (30%)
DCF Analysis (70%)
Current Price
Implied Price
Under (Over) Value
45.00
43.23
33.08
43.76
32.28%
Jarden Corporation has market leading brands that will continue to grow in
market share. As the company expands internationally and works to grow
margins, this will only increase value for the firm. The current stock price is not
reflective of the value and free cash flow that Jarden’s products can create. My
discounted cash flow analysis derived an implied price of $43.23, or a 30.68%
undervaluation. The relative analysis derived an implied price of $45.00, a
36.02% undervaluation. I weighted by DCF at 70% and comparable analysis at
30%. This leads to an implied price of $43.76. With an undervaluation of
32.28%, I recommend Jarden Corporation as a buy for the Tall Firs and Svigals
portfolios.
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Appendix 1 – Comparables Analysis
Comparables Analysis
($ in millions)
Stock Characteristics
Current Price
50 Day Moving Average
200 Day Moving Average
Beta
Size
Short-Term Debt
Long-Term Debt
Cash and Cash Equivalent
Non-Controlling Interest
Preferred Stock
Diluted Basic Shares
Market Capitalization
Enterprise Value
Profitability Margins
Gross Margin
EBIT Margin
EBITDA Margin
Net Margin
Credit Metrics
Interest Expense
Debt/EV
Leverage Ratio
Interest Coverage Ratio
Operating Results
Revenue
Gross Profit
EBIT
EBITDA
Net Income
Valuation
EV/Revenue
EV/Gross Profit
EV/EBIT
EV/EBITDA
JAH
Median
$25.71
25.65
29.41
1.53
$33.08
29.93
32.10
1.49
NWL
Newell
Rubbermaid
40.00%
$13.54
12.58
15.12
1.71
Jarden Corp
Max
$58.33
57.61
62.31
1.71
Min
Weight Avg.
$0.00
$29.29
12.58
28.26
15.12
31.81
0.86
1.44
TUP
SPB
Tupperware
Brands
Spectrum Brands
25.00%
25.00%
$58.33
$25.71
57.61
24.63
62.31
28.66
1.55
0.86
HELE
Helen of Troy
Limited
10.00%
$28.60
26.67
30.16
1.51
722.70
3,033.70
494.60
3.50
0.00
294.30
3,984.82
6,690.42
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
307.12
1,401.73
82.05
1.40
0.00
149.34
2,930.50
4,558.71
26.68
418.20
25.14
0.00
0.00
50.86
1,307.69
2,967.91
164.10
3,033.70
494.60
0.00
0.00
88.60
2,930.89
5,634.09
722.70
2,123.00
143.60
3.50
0.00
294.30
3,984.82
6,690.42
2.30
418.20
0.00
0.00
0.00
63.10
3,680.62
4,101.12
26.68
1,721.92
88.38
0.00
0.00
50.86
1,307.69
2,967.91
108.00
175.00
25.14
0.00
0.00
31.29
894.95
1,152.81
68.44%
14.61%
16.65%
10.06%
30.46%
6.82%
9.68%
-2.09%
47.53%
9.47%
12.22%
5.15%
40.46%
8.54%
10.98%
5.60%
30.46%
8.54%
10.98%
3.48%
40.46%
6.82%
9.68%
5.60%
68.44%
14.61%
16.65%
9.72%
39.07%
7.45%
10.86%
-2.09%
44.67%
12.32%
14.73%
10.06%
$212.81
0.59
5.12
12.07
$12.09
0.10
1.02
1.61
$104.17
0.37
3.74
6.26
$44.80
0.34
3.49
7.54
$182.30
56.76%
4.39
3.99
$96.40
42.53%
5.04
5.85
$44.80
10.25%
1.02
9.23
$212.81
58.92%
5.12
1.61
$12.09
24.55%
1.94
12.07
$6,626.10
2,359.50
566.10
727.60
326.40
$0.00
0.00
0.00
0.00
-65.66
$3,840.21
1,720.68
320.56
429.21
184.49
$2,484.50
1,230.17
234.49
341.80
99.64
$6,626.10
2,018.00
566.10
727.60
230.30
$5,832.10
2,359.50
397.50
564.40
326.40
$2,484.50
1,700.30
362.90
413.60
241.50
$3,148.59
1,230.17
234.49
341.80
-65.66
$990.95
442.63
122.09
145.98
99.64
1.65x
2.84x
16.83x
11.85x
0.85x
2.41x
9.44x
7.74x
1.22x
2.60x
13.67x
10.18x
1.15x
2.60x
11.30x
8.68x
0.85x
2.79x
9.95x
7.74x
1.15x
2.84x
16.83x
11.85x
1.65x
2.41x
11.30x
9.92x
0.94x
2.41x
12.66x
8.68x
1.16x
2.60x
9.44x
7.90x
Multiple
EV/Revenue
EV/EBIT
EV/EBITDA
Price Target
Current Price
Undervalued
Implied Price
Weight
49.83
20.00%
45.64
40.00%
41.93
40.00%
$45.00
33.08
36.02%
UOIG 13
University of Oregon Investment Group
October 28, 2011
Appendix 2 – Discounted Cash Flows Analysis
Discounted Cash Flow Analysis
($ in millions)
Total Revenue
Q1
2007A
4660.10
% YoY Growth
Cost of Goods Sold
3421.00
2008A
2009A
2010A
5383.30
5152.60
6022.70
15.52%
-4.29%
16.89%
3760.20
3596.30
4241.10
Q2
Q3
Q4
03/31/2011A 06/30/2011A 09/30/2011A 12/31/2011E
1483.40
1041.50
1673.80
1155.00
1784.70
1227.40
1839.39
1269.18
2011E
2012E
2013E
2014E
2015E
2016E
2017E
2018E
2019E
2020E
6781.29
7177.05
7584.24
8050.81
8436.36
8812.60
9196.27
9572.39
9921.09
12.60%
5.84%
5.67%
6.15%
4.79%
4.46%
4.35%
4.09%
3.64%
10260.06
3.42%
4,693.08
4,952.16
5,293.80
5,611.41
5,871.71
6,124.75
6,391.41
6,633.67
6,756.26
6,976.84
% Revenue
73.41%
69.85%
69.80%
70.42%
70.21%
69.00%
68.77%
69.00%
69.25%
69.00%
69.80%
69.70%
69.60%
69.50%
69.50%
69.30%
68.10%
68.00%
Gross Profit
$1,239.10
$1,623.10
$1,556.30
$1,781.60
$441.90
$518.80
$557.30
$570.21
$2,088.21
$2,224.89
$2,290.44
$2,439.39
$2,564.65
$2,687.84
$2,804.86
$2,938.72
$3,164.83
$3,283.22
26.59%
30.15%
30.20%
29.58%
29.79%
31.00%
31.23%
31.00%
30.79%
31.00%
30.20%
30.30%
30.40%
30.50%
30.50%
30.70%
31.90%
32.00%
861.10
1013.70
963.90
1211.80
313.10
312.60
326.00
349.48
1,301.18
1,356.46
1,425.84
1,505.50
1,569.16
1,630.33
1,692.11
1,746.96
1,795.72
1,846.81
18.48%
18.83%
18.71%
20.12%
21.11%
18.68%
18.27%
19.00%
19.26%
18.90%
18.80%
18.70%
18.60%
18.50%
18.40%
18.25%
18.10%
18.00%
96.40
120.30
130.30
142.80
40.10
41.30
40.30
42.03
199.60
254.81
313.15
271.35
230.62
240.63
248.16
256.74
264.95
273.04
2.07%
2.23%
2.53%
2.37%
2.70%
2.47%
2.26%
2.29%
2.94%
3.55%
4.13%
3.37%
2.73%
2.73%
2.70%
2.68%
2.67%
2.66%
65.30
343.00
75.20
19.70
12.80
0.00
6.20
7.36
26.36
107.66
106.18
112.71
109.67
114.56
119.55
124.44
119.05
123.12
Gross Margin
Selling General and Administrative Expense
% Revenue
Depreciation and Amortization
% Revenue
Other Expense
% Revenue
Earnings Before Interest & Taxes
1.40%
6.37%
1.46%
0.33%
0.86%
0.00%
0.35%
0.40%
0.40%
1.50%
1.40%
1.40%
1.30%
1.30%
1.30%
1.30%
1.20%
1.20%
$216.30
$146.10
$386.90
$407.30
$75.90
$164.90
$184.80
$171.34
$561.07
$505.96
$445.27
$549.83
$655.19
$702.32
$745.03
$810.58
$985.10
$1,040.25
% Revenue
4.64%
2.71%
7.51%
6.76%
5.12%
9.85%
10.35%
9.31%
8.27%
7.05%
5.87%
6.83%
7.77%
7.97%
8.10%
8.47%
9.93%
10.14%
Interest Expense
149.70
178.70
147.50
177.80
45.10
46.00
43.70
45.98
180.78
215.31
227.53
241.52
261.53
264.38
285.08
301.53
312.51
338.58
% Revenue
3.21%
3.32%
2.86%
2.95%
3.04%
2.75%
2.45%
2.50%
2.68%
3.00%
3.00%
3.00%
3.10%
3.00%
3.10%
3.15%
3.15%
3.30%
66.60
(32.60)
239.40
229.50
30.80
118.90
141.10
125.35
380.28
290.65
217.75
308.31
393.67
437.94
459.95
509.05
672.59
701.67
1.43%
(.61%)
4.65%
3.81%
2.08%
7.10%
7.91%
6.81%
5.98%
4.05%
2.87%
3.83%
4.67%
4.97%
5.00%
5.32%
6.78%
6.84%
38.50
26.30
110.70
122.80
11.80
45.00
50.40
47.63
154.83
104.63
77.30
109.45
139.75
155.47
163.28
180.71
238.77
249.09
57.81%
(80.67%)
46.24%
53.51%
38.31%
37.85%
2.82%
38.00%
29.25%
36.00%
35.50%
35.50%
35.50%
35.50%
35.50%
35.50%
35.50%
35.50%
$28.10
($58.90)
$128.70
$106.70
$19.00
$73.90
$90.70
$77.72
$225.45
$186.01
$140.45
$198.86
$253.91
$282.47
$296.67
$328.34
$433.82
$452.58
Add Back: Depreciation and Amortization
96.40
120.30
130.30
142.80
40.10
41.30
40.30
42.03
199.60
254.81
313.15
271.35
230.62
240.63
248.16
256.74
264.95
273.04
Add Back: Interest Expense*(1-Tax Rate)
63.16
322.87
79.30
82.66
27.82
28.59
42.47
28.51
127.91
137.80
146.75
155.78
168.69
170.52
183.88
194.49
201.57
218.39
Operating Cash Flow
187.66
384.27
338.30
332.16
86.92
143.79
173.47
148.26
552.96
578.62
600.35
625.99
653.22
693.63
728.71
779.56
900.35
944.00
% Revenue
4.03%
7.14%
6.57%
5.52%
5.86%
8.59%
9.72%
8.06%
8.15%
8.06%
7.92%
7.78%
7.74%
7.87%
7.92%
8.14%
9.08%
9.20%
2,550.20
2,729.10
2,988.00
3,370.80
3,373.70
3,521.60
3,516.40
3,605.21
3,605.21
3,574.17
3,792.12
4,113.96
4,353.16
4,622.21
4,892.41
5,145.16
5,327.62
5,463.48
Earnings Before Taxes
% Revenue
Less Taxes (Benefits)
Tax Rate
Net Income
Net Margin
Current Assets
% Revenue
Current Liabilities
% Revenue
Net Working Capital
% Revenue
54.72%
50.70%
57.99%
55.97%
227.43%
210.40%
197.03%
196.00%
53.16%
49.80%
50.00%
51.10%
51.60%
52.45%
53.20%
53.75%
53.70%
53.25%
1,280.40
1,354.40
1,484.50
1,677.20
1,428.60
1,495.10
1,474.00
1,351.95
1,351.95
1,797.85
1,945.36
2,093.21
2,248.29
2,392.62
2,551.96
2,704.20
2,872.15
2,970.29
27.48%
25.16%
28.81%
27.85%
96.31%
89.32%
82.59%
73.50%
19.94%
25.05%
25.65%
26.00%
26.65%
27.15%
27.75%
28.25%
28.95%
28.95%
$1,269.80
$1,374.70
$1,503.50
$1,693.60
$1,945.10
$2,026.50
$2,042.40
$2,253.26
$2,253.26
$1,776.32
$1,846.76
$2,020.75
$2,104.87
$2,229.59
$2,340.45
$2,440.96
$2,455.47
$2,493.19
24.30%
27.25%
25.54%
29.18%
28.12%
131.12%
121.07%
114.44%
122.50%
33.23%
24.75%
24.35%
25.10%
24.95%
25.30%
25.45%
25.50%
24.75%
104.900
128.800
190.100
251.500
81.400
15.900
210.858
211
-477
70
174
84
125
111
101
15
38
81.20
102.20
107.40
137.50
27.00
24.10
28.30
36.79
116.1
143.5
151.7
153.0
160.3
167.4
165.5
172.3
178.6
184.7
% Revenue
1.74%
1.90%
2.08%
2.28%
1.82%
1.44%
1.59%
2.00%
1.71%
2.00%
2.00%
1.90%
1.90%
1.90%
1.80%
1.80%
1.80%
1.80%
Acquisitions
909.50
42.60
13.70
755.50
0.00
0.00
13.40
0.00
13.40
143.54
151.68
161.02
168.73
176.25
183.93
191.45
198.42
205.20
Change in Working Capital
Capital Expenditures
% Revenue
19.52%
.79%
.27%
12.54%
0.00%
0.00%
.75%
0.00%
.19%
2.00%
2.00%
2.00%
2.00%
2.00%
2.00%
2.00%
2.00%
2.00%
Unlevered Free Cash Flow
-803.04
134.57
88.40
-750.94
-191.58
38.29
115.87
-99.38
212.65
768.48
226.54
138.02
240.09
225.22
268.39
315.30
508.84
516.39
Discounted Free Cash Flow
EBITDA
EBITDA Margin
-98
699
191
108
174
151
167
182
272
255
0.25
1.25
2.25
3.25
4.25
5.25
6.25
7.25
8.25
9.25
312.7
266.4
517.2
550.1
116.0
206.2
225.1
213.4
760.7
760.8
758.4
821.2
885.8
942.9
993.2
1067.3
1250.1
1313.3
6.71%
4.95%
10.04%
9.13%
7.82%
12.32%
12.61%
11.60%
11.22%
10.60%
10.00%
10.20%
10.50%
10.70%
10.80%
11.15%
12.60%
12.80%
UOIG 14
University of Oregon Investment Group
October 28, 2011
Appendix 3 – Revenue Model
Revenue Model
($ in millions)
Outdoor Solutions
Q1
2007A
1698.6
% Growth
Consumer Solutions
1869.2
% Growth
Branded Consumables
806.2
% Growth
Process Solutions
353.6
% Growth
Corporate Elimin.
-67.5
% Growth
Total Revenue
% Growth
4660.1
2008A
2009A
2010A
2481
2311.8
2518.7
46.06%
(6.82%)
8.95%
1812.9
1835.9
1869.6
(3.01%)
1.27%
1.84%
804.9
792.1
1345.3
(.16%)
(1.59%)
69.84%
348.6
292.6
342.7
(1.41%)
(16.06%)
17.12%
-64.1
-49.8
-53.6
(5.04%)
(22.31%)
7.63%
5383.3
5182.6
6022.7
15.52%
(3.73%)
16.21%
Q2
Q3
Q4
03/31/2011A 06/30/2011A 09/30/2011A 12/31/2011E
677.5
772.8
707.3
346.8
389.2
522.4
386
434.1
477.8
89
92.3
92.4
-15.9
1483.4
-14.6
1673.8
-15.2
1784.7
2011E
2012E
2013E
2014E
2015E
2016E
2017E
2018E
2019E
2020E
735.6
2893.2
3139.1
3390.2
3627.6
3863.4
4095.2
4340.9
4601.3
4831.4
4.00%
14.87%
8.50%
8.00%
7.00%
6.50%
6.00%
6.00%
6.00%
5.00%
5072.9
5.00%
532.8
1791.2
1845.0
1900.3
1957.3
2016.1
2076.5
2138.8
2181.6
2225.3
2269.8
2.00%
(4.19%)
3.00%
3.00%
3.00%
3.00%
3.00%
3.00%
2.00%
2.00%
2.00%
492.1
1790.0
1879.5
1973.5
2062.3
2144.8
2219.9
2286.5
2355.1
2425.7
2474.2
3.00%
33.06%
5.00%
5.00%
4.50%
4.00%
3.50%
3.00%
3.00%
3.00%
2.00%
94.2
367.9
375.3
382.8
467.0
476.4
485.9
495.6
500.6
505.6
510.6
2.00%
7.37%
2.00%
2.00%
22.00%
2.00%
2.00%
2.00%
1.00%
1.00%
1.00%
-15.4
-61.1
-61.9
-62.7
-63.4
-64.2
-64.9
-65.5
-66.2
-66.9
-67.5
1.50%
14.04%
1.25%
1.25%
1.25%
1.25%
1.00%
1.00%
1.00%
1.00%
1.00%
6781.3
7177.0
7584.2
8050.8
8436.4
8812.6
9196.3
9572.4
9921.1
10260.1
12.60%
5.84%
5.67%
6.15%
4.79%
4.46%
4.35%
4.09%
3.64%
3.42%
1839.4
UOIG 15
University of Oregon Investment Group
October 28, 2011
Appendix 4 – Working Capital Model
Working Capital Model
($ in millions)
Total Revenue
Current Assets
Cash & Cash Equivalents
% of Revenue
Accounts Receivable
Days Sales Outstanding A/R
% of Revenue
Inventory
Days Inventory Outstanding
% of Revenue
Prepaid Expenses
% of Revenue
Other Assets
% of Revenue
Total Current Assets
% of Revenue
Long Term Assets
Net PP&E Beginning
Capital Expenditures
Depreciation and Amortization
Net PP&E Ending
Total Current Assets & Net PP&E
% of Revenue
Current Liabilities
Accounts Payable
Days Payable Outstanding
% of Revenue
Accrued Charges
Days Charges Outstanding
% of Revenue
Income Taxes Payable
% of Revenue
Current Portion of Long Term Debt
% of Revenue
Other Liabilities
% of Revenue
Total Current Liabilities
% of Revenue
2007A
2008A
2009A
2010A
Q1
Q2
Q3
Q4
03/31/2011A
06/30/2011A
09/30/2011A
12/31/2011E
2011E
2012E
2013E
2014E
2015E
2016E
2017E
2018E
2019E
2020E
$4,660.10
$5,383.30
$5,182.60
$6,022.70
$1,483.40
$1,673.80
$1,784.70
$1,839.39
$6,781.29
$7,177.05
$7,584.24
$8,050.81
$8,436.36
$8,812.60
$9,196.27
$9,572.39
$9,921.09
$10,260.06
220.50
4.73%
978.50
392.80
7.30%
894.10
827.40
15.96%
851.30
695.40
11.55%
1067.70
405.60
27.34%
1136.60
494.60
29.55%
1110.80
446.30
25.01%
1188.60
570.21
31.00%
1195.61
570.21
8.50%
1195.61
$627.99
8.75%
$1,148.33
$682.58
9.00%
$1,213.48
$724.57
9.00%
$1,328.38
$759.27
9.00%
$1,392.00
$815.17
9.25%
$1,498.14
$850.65
9.25%
$1,563.37
$909.38
9.50%
$1,646.45
$942.50
9.50%
$1,711.39
$974.71
9.50%
$1,744.21
21.00%
1126.20
120
24.17%
84.50
16.61%
1180.40
115
21.93%
114.50
16.43%
974.10
99
18.80%
182.00
17.73%
1294.60
111
21.50%
146.60
76.62%
1494.10
524
100.72%
161.80
66.36%
1583.60
500
94.61%
175.60
66.60%
1569.20
467
87.93%
185.90
65.00%
1471.52
423
80.00%
193.14
21.70%
1471.52
114
21.70%
193.14
16.00%
$1,435.41
106
20.00%
$179.43
16.00%
$1,516.85
105
20.00%
$189.61
16.50%
$1,650.42
107
20.50%
$201.27
16.50%
$1,771.64
110
21.00%
$210.91
17.00%
$1,850.65
110
21.00%
$220.31
17.00%
$2,023.18
116
22.00%
$206.92
17.20%
$2,105.93
116
22.00%
$215.38
17.25%
$2,182.64
118
22.00%
$223.22
17.00%
$2,257.21
$118.09
22.00%
$220.59
1.81%
140.50
2.13%
147.30
3.51%
153.20
2.43%
166.50
10.91%
175.60
10.49%
157.00
10.42%
126.40
10.50%
174.74
2.85%
174.74
2.50%
$183.01
2.50%
$189.61
2.50%
$209.32
2.50%
$219.35
2.50%
$237.94
2.25%
$248.30
2.25%
$268.03
2.25%
$267.87
2.15%
$266.76
3.01%
2550.2
54.72%
2.74%
2729.1
50.70%
2.96%
2988
57.65%
2.76%
3370.8
55.97%
11.84%
3373.7
227.43%
9.38%
3521.6
210.40%
7.08%
3516.4
197.03%
9.50%
3605.21224
196.00%
2.58%
2.55%
2.50%
2.60%
2.60%
2.70%
2.70%
2.80%
2.70%
3605.21224 3574.170561 3792.118611 4113.962817 4353.161718 4622.206823 4892.414341 5145.160313 5327.622835
53.16%
49.80%
50.00%
51.10%
51.60%
52.45%
53.20%
53.75%
53.70%
2.60%
$5,463.48
53.25%
618.90
613.66
530.11
418.84
257.38
138.99
68.66
-4.53
-87.16
-171.60
36.79
116.06
143.54
151.68
152.97
160.29
167.44
165.53
172.30
178.58
-42.03
-199.60
-254.81
-313.15
-271.35
-230.62
-240.63
-248.16
-256.74
-264.95
613.66
530.11
418.84
257.38
138.99
68.66
-4.53
-87.16
-171.60
-257.97
4218.868846 4135.324178 3993.014306 4049.497635 4252.957205 4421.822505 4617.674232 4805.250128 4973.561518 5069.649318
229.36%
60.98%
55.64%
53.39%
52.83%
52.41%
52.40%
52.25%
51.96%
51.10%
-257.97
184.68
-273.04
-346.33
$5,117.15
49.87%
510.90
3061.1
65.69%
506.90
3236
60.11%
505.70
3493.7
67.41%
658.90
4029.7
66.91%
655.70
4029.4
271.63%
646.80
4168.4
249.04%
618.90
4135.3
231.71%
439.30
47
9.43%
134.60
11
2.89%
20.90
422.10
41
7.84%
142.00
10
2.64%
22.70
390.70
40
7.54%
162.30
11
3.13%
26.60
573.30
49
9.52%
180.20
11
2.99%
27.90
619.30
217
41.75%
147.20
36
9.92%
20.60
653.60
207
39.05%
171.80
37
10.26%
23.80
641.10
191
35.92%
162.50
33
9.11%
28.80
919.70
264
50.00%
183.94
37
10.00%
27.59
919.70
72
7.60%
183.94
10
10.00%
27.59
$559.81
41
7.80%
$179.43
9
2.50%
$35.89
$606.74
42
8.00%
$200.98
10
2.65%
$37.92
$644.06
42
8.00%
$221.40
10
2.75%
$40.25
$696.00
43
8.25%
$244.65
11
2.90%
$42.18
$727.04
43
8.25%
$255.57
11
2.90%
$44.06
$781.68
45
8.50%
$275.89
11
3.00%
$45.98
$837.58
46
8.75%
$287.17
11
3.00%
$47.86
$892.90
48
9.00%
$307.55
11
3.10%
$59.53
$923.41
$48.31
9.00%
$318.06
$11.32
3.10%
$61.56
0.45%
0.42%
0.51%
0.46%
1.39%
1.42%
1.61%
1.50%
1.50%
0.50%
0.50%
0.50%
0.50%
0.50%
0.50%
0.50%
0.60%
0.60%
297.80
6.39%
387.80
8.32%
1280.40
27.48%
431.40
8.01%
336.20
6.25%
1354.40
25.16%
520.30
10.04%
384.60
7.42%
1484.50
28.64%
434.60
7.22%
461.20
7.66%
1677.20
27.85%
162.20
10.93%
479.30
32.31%
1428.60
96.31%
164.10
9.80%
481.80
28.78%
1495.10
89.32%
162.90
9.13%
478.70
26.82%
1474.00
82.59%
220.73
12.00%
0.00
0.00%
1351.95
73.50%
220.73
3%
0.00
0.00%
1351.95
19.94%
$520.34
7.25%
$502.39
7.00%
1797.85
25.05%
$568.82
7.50%
$530.90
7.00%
1945.36
25.65%
$623.94
7.75%
$563.56
7.00%
2093.21
26.00%
$674.91
8.00%
$590.55
7.00%
2248.29
26.65%
$749.07
8.50%
$616.88
7.00%
2392.62
27.15%
$804.67
8.75%
$643.74
7.00%
2551.96
27.75%
$861.52
9.00%
$670.07
7.00%
2704.20
28.25%
$917.70
9.25%
$694.48
7.00%
2872.15
28.95%
$949.06
9.25%
$718.20
7.00%
$2,970.29
28.95%
% of Accounts Receivable Quick
85%
% of Inventory Quick
65%
Quick Ratio
1.39
1.42
1.47
1.46
1.64
1.65
1.68
1.88
1.88
1.41
1.39
1.40
1.38
1.38
1.37
1.36
1.33
1.32
Current Ratio
1.99
2.01
2.01
2.01
2.36
2.36
2.39
2.67
2.67
1.99
1.95
1.97
1.94
1.93
1.92
1.90
1.85
1.84
UOIG 16
University of Oregon Investment Group
October 28, 2011
Appendix 5 – Discounted Cash Flows Analysis Assumptions
Discounted Free Cash Flow Assumptions
Tax Rate
Risk Free Rate
Beta
Market Risk Premium
35.50% Terminal Growth Rate
2.18% Terminal Value
1.49 PV of Terminal Value
7.00% Sum of PV Free Cash Flows
Considerations
3.00%
10,834
4,764
2,100
% Equity
49.14% Firm Value
6,864
% Debt
50.86% Total Debt
3,034
Cost of Debt
5.19% Cash & Cash Equivalents
495
CAPM
12.63% Market Capitalization
WACC
7.91% Fully Diluted Shares
2,931
Terminal WACC
8.35% Implied Price
43.23
Current Price
33.08
Undervalued
30.68%
89
UOIG 17
University of Oregon Investment Group
October 28, 2011
Appendix 8 – Sources















Jarden Corporation 10K
Jarden Corporation 10Q
www.jarden.com
Jarden Investor Relations
Business Source Premier
Standard & Poors Net Advantage
IBIS World
Google Finance
Yahoo! Finance
FactSet
Sec.gov
www.newellrubbermaid.com
www.hotus.com
www.spectrumbrands.com
www.tupperwarebrands.com
UOIG 18