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Miami, FL – September 12, 2018 ( NewsWire) —, a leading independent small cap media portal with an extensive history of providing unparalleled content for the Emerging Growth markets and companies, reports on Stein Mart, Inc. (NASDAQ: SMRT).

Florida-basedStein Mart, Inc. (NASDAQ: SMRT)is one of the many traditional retailers that struggled to keep up in the E-commerce age. 2018 continues to be a challenging year for traditional retailers, with several large retailers expected to continue their ongoing store closures:

The so-called “Amazon Effect” is the main culprit, where retail dollars are going to the online sellers. Based on industry forecasts, the E-commerce market is estimated to grow at an annual growth rate of 10% from $1.78 trillion in 2018 to $2.60 trillion in 2022 and online retail giants such as Amazon (NASDAQ: AMZN)and eBay Inc. (NASDAQ: EBAY) will continue to flex their dominance over the next five years.

To stay afloat in a competitive retail market, traditional retailers have started optimizing their online shopping portals to meet these online retail giants head-on. Moreover, traditional retailers are offering exclusive products not available in brick and morter stores, creating a pleasant shopping experience, and offering great deals to consumers.

“Stein Mart Turnaround Story”

Stein Mart, Inc. (NASDAQ: SMRT) is on a cusp of a turnaround, which involves focusing on profitable product lines of ladies and boutique products, enhancing their E-commerce store, and rationalizing costs through the reduction of excess inventory and overhead. The company has also commissioned a new marketing agency to arrest the continued sales downtrend, and SMRT started a “ship from store” policy to improve their multi-channel capabilities. Further, the company has decided to close 4 underperforming stores during the first half of 2018 to boost their cost savings initiatives.

These management efforts immediately paid handsomely, as the company reported a significant improvement in operating results in the recent 2ndquarter 2018 results, with 1sthalf 2018 EBITDA of $29 million, more than four-fold above prior year’s levels. For the full year 2018, management expects to report EBITDA in excess of $45 million.

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It would be too early to call this a successful turnaround story, as investors need to validate Stein Mart’s succeeding quarterly results but smart money is betting on the fact that experience has a good chance to turn the company around.

“Addressing the Elephant in the Room – High Debt Levels”

The company’s high debt load of $174 million is a key concern since EBITDA levels appear insufficient to cover the current portion of long-term debt. The company, however, was able to negotiate with lenders and rolled a portion of the debt obligation to make it more manageable. .

Additionally, the company’s cash flows are prioritized to reduce bank debt instead of dividends or stock buybacks – much to the disappointment of investors. Despite the recent share run-up, At $2.15 per share, we believe that Stein Mart is undervalued. If we use a 9.47x retail industry EBITDA multiple, shares could trade as much as $5.8 per share or a 169% upside from the current share price levels.

While the company may not be out of the woods quite yet, we feel that SMRT is a good speculative play.

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