This Weeks Free Stock Pick - Investing in Apparel Sales Earnings Growth
The fourth quarter is always vital for retailers, and Express (NYSE:EXPR) is no exception. More than half of its operating income came from the holiday quarter last year, for instance. The company came through and delivered better-than-expected Q4 results on March 11, as both sales and EPS topped the Zacks Consensus Estimates.
Additionally, management issued encouraging guidance for 2015, prompted a flurry of positive estimate revisions from analysts. This sent the stock to a Zacks Rank #1 (Strong Buy).
Express, Inc. is a specialty apparel and accessories retailer, targeting 20-30 year old men and women. It currently operates approximately 640 stores, located primarily in shopping malls, lifestyle centers, and street locations across the United States, Canada, and Puerto Rico.
Fourth Quarter Results
Express delivered better-than-expected results for the all-important fourth quarter on March 11. Earnings per share came in at $0.49, beating the Zacks Consensus Estimate by 3 cents.
Net sales rose 1% year-over-year to $725.8 million, ahead of the consensus of $714.0 million. Same-store sales (including e-commerce) declined by 2% but beat management's guidance.
Merchandise margins increased 70 basis points as Express benefited from more targeted promotional activity. Operating income declined 10% year-over-year, however, as operating margins fell from 11.9% to 10.5% of net sales. But this was due in part to higher incremental marketing activities, which should pay off through higher future sales.
Following its Q4 results, management provided an encouraging outlook for 2015. The company expects same-store sales growth in the low-single digits and adjusted EPS of $0.93-$1.07. This was above consensus at the time and prompted analysts to not only revise their estimates higher for 2015 but for 2016 as well.
These large positive estimate revisions sent Express to a Zacks Rank #1 (Strong Buy).
The 2015 Zacks Consensus Estimate is now $1.06, up from $0.92 just 60 days ago. The 2016 consensus estimate is currently $1.17, up from $1.00 over the same period.
Shares have risen for Express following the strong Q4 report, but the valuation picture still looks reasonable. Shares trade around 15x 12-month forward earnings, a discount to the industry median of 19x. Its enterprise value to cash flow ratio of 9 is also well below the industry median of 12.
Its price to sales ratio of 0.6 is also a significant discount to the peer group multiple of 1.1.
The Bottom Line
With strong earnings momentum and reasonable valuation, Express offers investors attractive upside potential near term.
Invest2Success "Profit Rockets" Stock Picks
Free Trial - Receive daily low-risk high-reward SP500 NYSE Nasdaq buy-long and short-sell stock picks that are experiencing strong increasing and decreasing earnings, that include buy sell entry, stop-loss, take profit area price targets, and trade management information to your email inbox.
Van Tharp Institute
Investing Trading Home Study Programs & Live Seminars Workshops
Dedicated to cutting edge, high quality professional educational investing trading programs for traders and investors providing a road map for financial freedom. The finest investing trading education in the financial universe. Dr Van Tharp is one of the orginal Market Wizards, and referred to as the Traders Coach.
Track n Trade CandleStick Auto-Recognition Plug-in
Quickly identify candlestick patterns without thinking. With Track 'n Trade, you have the ability to click, and select your favorite candle patterns, and have Track 'n Trade find, identify, and even auto-trade each signal through our famed Autopilot Trading System.
Steve Nisons Candlestick Charting Intensive Training and Software
for Profitably Trading Stocks Forex Futures Commodities
Use the CandleScanner trading software to automatically scan for profitable trading setups on any timeframe. Stock forex and futures candlestick trading courses to throughly understand how to profit from candlestick chart patterns. Free newsletter and live trading webinars. Steve Nison is the authority on trading and profiting using candlesticks.
Stock Option Forex Futures Training Seminars Webinars Workshops
Click Here For The Complete 2015 Schedule
Professional investors traders teaching successful low-risk high-reward
trade strategies. Power profit secrets for stocks, options, forex, futures
investing trading success. Or avail of Home Study Courses and or
Trading Softwares available to improve your investment returns.