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Delta Report

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Delta Apparel Inc. (DLA)

Corporate Overview
Delta Apparel, Inc., through its subsidiaries, operates as an international design, marketing, manufacturing, and sourcing company that features a portfolio of branded and private label activewear apparel and headwear. The company primarily offers casual and athletic products for men, women, juniors, youth, and children under the Soffe, The Cotton Exchange, Intensity Athletics, Junk Food, and The Game brand names. It also markets apparel garments for the entire family under Delta Pro Weight, Delta Magnum Weight, Quail Hollow, Healthknit, and FunTees brand names. In addition, the company engages in designing, marketing, and manufacturing private label custom knit t-shirts primarily to branded sportswear companies. It sells its products to specialty and boutique shops, upscale and traditional department stores, mid-tier retailers, sporting goods stores, screen printers, private label accounts, college bookstores, and the United States military. The company also sells its products directly to consumers on its Web sites at soffe.com, junkfoodclothing.com, saltlife.com, and deltaapparel.com. It has operations primarily in the United States, Honduras, El Salvador, and Mexico. Delta Apparel, Inc. was founded in 1999 and is headquartered in Greenville, South Carolina.

Discounted Cash Flow Valuation
I use the FCFF model to evaluate Delta’s price. The three-stage model assumes that the firm will have an impressive growth first, and then has a more moderate growth rate during the second period. The third stage is the growth to infinity.

Based on historical data, sales growth rates in 2010 and 2011 are 19.5% and 12.0%, respectively, and combined with the analysts’ estimates, I decided to project the sales growth rate for 2012 and 2013 to be 10%. From 2014 to 2016, as the market becomes more saturated, I use a slightly lower

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