True Religion Apparel (NASDAQ:TRLG) is a premium denim merchandiser whose stock price has been as volatile as the fashion market. The volatile nature of its historical price action can at times be breathtaking. However, the company's operating history has been more benign. Although its business did slow since the Great Recession, it has remained a very profitable company. Perhaps the initiation of a dividend represents change in the company's long-term investment dynamic. What was once a growth stock is becoming a dividend growth stock with an above-average yield.
This article is intended to look at True Religion Apparel's "essential fundamentals at a glance" through the lens of the F.A.S.T. Graphs™ research tool. Therefore, rather than reinvent the wheel, we direct the readers to an article written by a fellow Seeking Alpha contributor: "True Religion: An Arbitrage Bargain Or Value Trap?" by No Mean Sum.
A Live F.A.S.T. Graphs™ on True Religion Apparel
The F.A.S.T. Graphs™ on True Religion Apparel illustrates that this small-cap dividend growth stock can be purchased at a sound valuation. Therefore, we rate True Religion Apparel a buy based on the following fundamental metrics:
- a P/E ratio of 14, which is in line with the company's historical earnings growth and its forecast future growth
- a price-to-sales ratio of 1.51, which is very low by historical standards
- the company's healthy financial condition is a plus with no long-term debt and very strong free cash flow generation
- a current above-average dividend yield of 3.1%
Click to enlarge image.
Moreover, in order to conduct your own research and get a clearer perspective on True Religion Apparel's valuation, click on the picture above that links you to a fully functioning sample F.A.S.T. Graphs™ on True Religion Apparel and research this small-cap dividend growth stock deeper and faster.
Run this "tool to think with" through its paces. Use the tan navigation bar to the left of the graphs and draw multiple graphs ranging from two to 20 years of history. Discover how this tool instantly provides a clear picture of the business behind the stock and dynamically re-evaluates valuation and reveals the clear correlation between the company's earnings and price.)
Note: This link will be live for 90 days beginning Oct. 24, 2012. For more advanced instructions on how to utilize the live graph, follow this link.
Summary and Conclusions
True Religion Apparel is a small-cap dividend growth stock that appears to be reasonably priced at current levels. The initiation of a dividend, which currently offers an above-average yield, is a plus -- especially if consensus estimates of 15% future growth proves to be accurate. This would imply above-average capital appreciation, coupled with above-average dividend yield with the potential to grow at a high rate.
Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned or to solicit transactions or clients. Past performance of the companies discussed may not continue and the companies may not achieve the earnings growth as predicted. The information in this document is believed to be accurate, but under no circumstances should a person act upon the information contained within. We do not recommend that anyone act upon any investment information without first consulting an investment advisor as to the suitability of such investments for his specific situation.