FTD Group Moat Check

The next stock on the Magic Formula list is FTD Group (FTD).  This florist would have been the perfect Valentine’s Day stock.  To bad I didn’t get to it earlier.  I am sure many of you are familiar with FTD.  I have used FTD a few times in the past for flowers, but I now prefer ProFlowers.

I took a look at the big five numbers, and they were not impressive for FTD Group.  These factors include ROIC, book value growth, earnings per share growth, sales growth, and free cash flow growth over the past five years. FTD Group’s financials on ADVFN kind of look wilted. ROIC is currently negative and it was also negative last year.  Book value per share, however, has been increasing at a good pace over the past year. Until recently, earnings per share had been negative and revenue growth has been rather flat.

As you can probably already tell, I don’t see a wide moat around FTD Group.  They do have a brand name, but I’m not so sure how loyal customers are to their brand. There are several national florist brand names that compete with them, including 1-800-Flowers (FLWS), ProFlowers of Provide Commerce (PRVD), and many others. 

I would be very hesitant to automatically buy FTD Group if I followed the recommended mechanical investing method described in Joel Greenblatt’s The Little Book That Beats the Market.  It’s likely that I’ll be wrong about FTD Group, but it will be interesting to see what happens to FTD over the coming year.

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