Stock of the Day
|
7-Eleven (SE)
7-Eleven Shares Heat Up On Buyout News
It's always a different feeling when national investment news hits close to home. In the case of 7-Eleven, the news is probably coming from a little closer than usual - down the street. The ubiquitous convenience store chain operates more than 27,000 stores across the globe, providing coffee and soda to the red-eyed traveler, as well as a host of other products such as ATMs, lottery tickets and gasoline. Now the Dallas, TX - based company is facing an interesting proposition: selling its remaining stake to Seven-Eleven Japan Company. What does this mean for the company, and what will happen to our seemingly endless supply of Slurpees?
|
| Daily Chart |
If you are not able to see the chart, your email client probably does not support javascript. To view it, please click here
|
| Stock Analysis |
Japan, Australia, Mexico, Taiwan, Singapore, Canada, the Philippines, Sweden, Denmark, South Korea, Thailand, Norway, Turkey, Malaysia, China and the U.S. territories of Puerto Rico and Guam. The laundry list certainly indicates that 7-Eleven has global reach. The company has surpassed earnings expectations each quarter since summer 2004, and has posted over $12.5bn in revenues. Since early 2003, the company's share price has leapt from $7 to over $28, then another increase after an offer of $37.50 a share from Seven-Eleven Japan. This represents a premium of over 30% when compared to the stock price in the end of August.
|
The stock has not always performed well. Before the September news about a possible buyout the stock had been slipping from $34 to $28, representing a decrease of nearly 18%. 7-Eleven's short interest ratio pointed to slower growth when compared to major competitors Albertson's (ABS: Charts, News, Offers), Safeway (SWY: Charts, News, Offers), Kroger (KR: Charts, News, Offers) and Whole Foods (WFMI: Charts, News, Offers). The company also has yet to issue a dividend within the last five years, which doesn't bode well considering that Albertson's and Whole Foods have.
|
It remains to be seen whether investors will still be saying "Oh Thank Heaven for 7-Eleven" if the proposed buyout goes through. Judging by the stock's jump in price since September, much of the share's value is more likely to be resting in speculation rather than being technically sound. This does not necessarily mean that the stock price will plummet, but it certainly indicates that watching company news is very important. Investors know of the company's history with its Japanese counterpart, especially since the Japanese unit helped jump start its bankrupt parent company, Southland Corporation (former name of 7-Eleven's holding company).
|
The offer has been given a thumbs up from 7-Eleven's advisory committee, who had called the previous offer of $32.50 a share unacceptable. While this does not mean that the offer is guaranteed to pass, it certainly indicates a high likelihood that the buyout will go through. Some analysts even suspect that the Japanese unit could increase its bid to almost $40 a share, since 7-Eleven is such a well-known global franchise.
|
Profile |
7-Eleven, Inc. is a convenience store chain. Their convenience stores are extended-hour retail stores, emphasizing convenience to the customer and providing beverages, candy, fresh take-out foods, groceries, tobacco items, self-serve gasoline, dairy products, non-food merchandise, specialty items, certain financial services, lottery tickets, and incidental services. Their stores are located in neighborhood areas, on main thoroughfares, in shopping centers, or on other sites where they are easily accessible and have ample parking facilities for quick shopping.
|
|
|
|
|
