Case Name :      American Greetings

Authors :           Michael J. Schill

Source :             Darden School of Business

Case ID :           UV6643

Discipline :        Finance

Case Length :    14 pages

Solution Sample availability : YES

Plagiarism : NO (100% Original work)

This case is used in Darden’s first year Finance course, but it would be appropriate in any course introducing firm valuation. A teaching note is available for instructors. This case examines the 2012 decision by American Greetings (AG), the greeting card company, to repurchase shares. At the time of the decision, the greeting card industry was facing an important structural shift; AG stock was trading at valuation multiples that were the lowest among its peer group. Students are invited to build a simple model of the company’s future cash flows and derive an implied value. Because the company is arguably in a state of maturity or decline, a discussion of steady-state economics is particularly germane.