A combination of solid year-to-date return of 70.4%, stellar
second-quarter fiscal 2012 performance, rising estimates and
strong comparable-store sales number for the month of September
Stage Stores Inc.
) to attain a Zacks #1 Rank (Strong Buy) status on October 23,
The Rank Drivers
Stage Stores' comparable-store sales for September rose 11.1%,
following an increase of 6.5% in August, buoyed by merchandising
initiatives and marketing strategies undertaken. Furthermore,
this department and off-price store retailer appears to have
enough potential to attain new highs based on an upbeat outlook
for fiscal 2012 following strong second quarter results.
Stage Stores posted second-quarter fiscal 2012 earnings of 37
cents per share on August 16, beating the Zacks Consensus
Estimate of 34 cents by 8.8% and year-ago earnings of 29 cents by
27.6%. The upside came on the back of higher comparable-store
sales and improved merchandise margins. This is the second
consecutive quarter that the company has outperformed the Zacks
Net sales of $381.6 million comfortably surpassed the Zacks
Consensus Estimate of $370 million, and grew 8.2% year-over-year
driven by comparable-store sales increase of 5.4%. Gross profit
grew 10.9% to $115.2 million, whereas gross margin expanded 80
basis points to 30.2% on the back of robust full-price sales and
Buoyed by strong first half performance, Stage Stores raised
its outlook for fiscal 2012. Management now envisions
comparable-store sales growth between 2.5% and 3.5%, and projects
earnings in the band of $1.15 to $1.25 per share. Earlier, the
company had forecasted comparable-store sales increase of 0.8% to
2.4% and earnings between $1.08 and $1.20 per share.
Stage Stores now expects fiscal 2012 sales in the range of
$1,605 million to $1,620 million. Previously, it had predicted
sales between $1,592 million and $1,615 million.
Uphill Earnings Estimates
The Zacks Consensus Estimate for fiscal 2012 rose 4.9% to
$1.28 per share over the last 30 days, implying year-over-year
growth of 38.9%. The current estimate lies ahead of the company's
guidance range. For fiscal 2013, the Zacks Consensus Estimate is
$1.45 per share, increasing 5.8% over the same time frame, and
marking a year-over-year growth of 13.7%.
A Look at Valuation
Stage Stores currently trades at a forward P/E of 18.67x,
indicating a premium of 6.7% to the peer group average of 17.49x.
Again, its price-to-book ratio of 1.72 reflects a substantial
discount of 43.2% to the peer group average of 3.03. Similarly,
the price-to-sales ratio reflects a discount of 37.7% to the peer
group, with shares trading at a multiple of 0.48. The company's
compelling fundamentals are well supported by its long-term
estimated EPS growth rate of 15.1%.
Headquartered in Houston, Texas, Stage Stores operates
department stores and off-price stores in the small and mid-sized
markets of the United States. The company's department stores
operate under the names such as Bealls, Goody's, Palais Royal,
Peebles and Stage, while its off-price chain carries the Steeles
These stores offer moderately priced, nationally recognized
brand name apparel, accessories, cosmetics and footwear. As of
October 1, 2012, the company operated in 40 states through 842
stores. Stage Stores primarily competes with
Ross Stores Inc.
ROSS STORES (ROST): Free Stock Analysis
STAGE STORES (SSI): Free Stock Analysis
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