Children's Place: Too Cheap To Ignore

Dec. 04, 2022 5:48 AM ETThe Children's Place, Inc. (PLCE)7 Comments
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Summary

  • Children's Place shares have fallen over 50% year-to-date as results have come in well below expectations.
  • Like most retailers, Children's Place is suffering from rising operating expenses, excess inventories, declining consumer confidence, and a heavily promotional environment.
  • While the current environment is difficult, expectations are low, and there are reasons to believe things will improve in 2023.
  • At just 6x 'normalized' earnings, Children's Place may be too cheap to ignore.

Defocused hallway

t_kimura/iStock via Getty Images

2021 was a banner year for the Children's Place (NASDAQ:PLCE) on the back of stimulus fueled, stay-at-home consumer exuberance. The company earned a whopping $13.40 per share. While most market observers knew 2021 results weren't sustainable, 2022 has been

FY outlook

Full Year Outlook (Investor Presentation)

Overview

Children's Place Overview (Investor Presentation)

freight

Global Freight Rates (Statista)

Normalized EPS

Normalized EPS Estimate (Author Estimate)

This article was written by

Weighing Machine profile picture
2.78K Followers
Former global buyside analyst/PM doing fundamental research for over a decade (2001-2012). Long term (5 year) time horizon when investing.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in PLCE over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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