Today we are going to introduce to you a worth investing company call Delta Apparel.

The company was established in 1903 and specializes in designing, merchandising, selling
and marketing casual and athletic products. Delta Apparel has a diverse distribution
channel includes department stores, e-retailers, outdoor retailers and even the U.S.
military. So much for the introduction part.
Our estimated stock price is $26.71 per share which is around $1.2/ share higher than
the current price. Our recommendation is definitely buy and we will explain in more
detail later through absolute valuation, relative valuation, merger valuation and SWOT
analysis.
So first is our absolute valuation, we get our cost of debt based on DLA’s five year
interest rate average and our cost of equity equals cost of equity plus risk premium
and should be 8%.
The company's cash flow is highly volatile due to the long-term stock repurchase strategy
and debt payment, and the investors would estimate that the company's future business
risks will increase, and demand higher capital returns, and as a result reduce the
company's value. So it has a negative impact on our valuation and future stock price
estimation, this actually supports the fact that our target stock price is a bit lower
than the equity value we get from the DCF model.