Seeking Alpha
  • OneLongTrade
    There goes RL. Another retailer that can't support its lofty valuations. Why do people let it get to this point?
    8/8/12
    Reply (17)
    • TruffelPig: P/E of 20 isn't that lofty. Maybe a bit.
      8/8/12
    • OneLongTrade: Retailers typically don't support high P/Es and trailing P/E is such a poor measure with all the profit warnings we are seeing.
      8/8/12
    • OneLongTrade: It is quite possible for many P/E ratios to double by year end due to a significant compression in EPS and revenues.
      8/8/12
    • anonymous#12: RL is still expensive. If they make $8.00 per share the P/E is around 17. Too high taking in consideration the weak revenue growth
      8/8/12
    • anonymous#12: and thus the weak earnings growth as they need to continue cutting to the bone.
      8/8/12
    • OneLongTrade: Just look at LULU, FOSL (with the exception of the massive short covering yesterday), TIF, JCP, and many more.
      8/8/12
    • OneLongTrade: I think UA may be next, they sport a 60x P/E but thus far they've been able to stand by their multiple through earnings reports...
      8/8/12
    • TruffelPig: I am long COH, their valuation seems ok
      8/8/12
    • OneLongTrade: Better than the others. But much of COH's gains over the past 2 years came on the back of China's consumer growth.
      8/8/12
    • OneLongTrade: Their last quarter warned of a slowdown in the Chinese consumer. If this remains the case, their valuation will remain depressed.
      8/8/12
    • TruffelPig: 60% increase in China is slowing?
      8/8/12
    • OneLongTrade: No, but that was what was reported for the previous quarter. Don't have the numbers from last year on hand. Warned on US consumer as well.
      8/8/12
    • TruffelPig: I know, that is why the stock went from 80 down to 50. It has very solid support around 50.
      8/8/12
    • TruffelPig: I sold $45 puts when the stock went under 50.
      8/8/12
    • OneLongTrade: And that's a fair way to play it, like I said undervalued relative to others. But I don't see it getting back to the 80 levels without a
      8/8/12
    • OneLongTrade: rebound in China and US consumers, and based on many, many outlooks, that will likely not happen this year.
      8/8/12
    • TruffelPig: Agree, my price target is around at 65 in one year.
      8/8/12