- An inexpensive retailer at 3x-5x earnings on current guidance.
- If pre-COVID profitability can be reached, the business is extremely cheap.
- However, there are material risks from shrinking margins, a high debt load, and a weak consumer.
- The risk-reward appears attractive, in aggregate, but this stock carries material risks.
- There are also reasons to think that the focus on helium balloons and the laser focus on party category gives the business some level of 'moat' within retail.
For further details see:
Party City Presents Contrarian Opportunity, But With High Leverage And Q1 Miss