Its not such a big secret. Just have a look into this forum - lots of discussion around GXL value some months ago.
For starters - GXL's balance sheet contains $528 million in intangibles (most of it "goodwill" - i.e. what they think the brand is worth. Take that away and they are technically bankrupt. Indication that they just might have paid too much for last years acquisitions (City Farmers, Pet barn). Not unusual for growth by purchase companies (that they buy at some stage too dear). Some people are wondering, whether a writedown might be appropriate.
As well - their share price can only be justified as long they hold their amazing CAGR. It is however more and more difficult for them to purchase growth (that's what they did so far) at a reasonable price. More competition and in some areas reaching market saturation - which means that the share price should be more a multiple of PE than based on the growth formula.
Take their growth away - and their share price would be more like $4 (based on a PE of 10). Maybe that's what the market sees?
Ah yes - and did I mention the Altmann-Z? 1.97 last time I checked (at report time). From memory - it slightly improved compared to last year, but still not a flash value (above 3 is reasonable secure - 2 is more "might bite the dust" territory). Does not look that flash - does it?
GXL Price at posting:
$4.76 Sentiment: None Disclosure: Not Held
