Simple. There are two factors that determine the value of a...

Simple.

There are two factors that determine the value of a company, these are:

1. Growth Rate
2. Discount Rate

The first factor is determined by the opportunities of the company - the sector they operate in (is it a new and upcoming sector i.e. medical marijuana) , absolute or relative advantage, niche products, and managements ability.

The second factor is subjective and most analysts, fund managers and instos apply a higher discount rate the more riskier the business appears to be.

Unfortunately for Myer, it falls down to both factors but mainly the growth rate. They have no growth opportunities and as such, the current market cap reflects this. It's also quite risky.

If Myer had current sales and good margins with strong growth opportunities, the market cap would be in the $1-$2b range but unfortunately the sector is experiencing huge disruptions and change. One must understand this before loading up on any retail stock.