Stage Stores Inc.
) achieved its 52-week high of $23.18 on October 4 due to several
factors, including its solid year-to-date return of 65.6%, stellar
second-quarter fiscal 2012 performance and strong comparable-store
sales for September. This department and off-price store retailer
had reached Zacks #1 Rank (Strong Buy) status a day earlier.
Stage Stores comparable-store sales for September rose 11.1%,
buoyed by merchandising initiatives and marketing strategies. (In
August, the company reported a gain of 6.5%.) Furthermore, SSI
appears to have enough potential to attain new highs based on an
upbeat outlook for fiscal 2012.
Profit Surges, Guidance Up
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 last year's earnings of 29 cents by 27.6%. The
upside came on the back of higher comparable-store sales and
improved merchandise margins.
Net sales of $381.6 million comfortably surpassed the Zacks
Consensus Estimate of $370 million, and grew 8.2% year-over-year
due to a comparable-store sales increase of 5.4%. Gross profit
advanced 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 a 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 earnings at $1.15 to $1.25
per share. Earlier, the company had forecasted a comparable-store
sales increase of 0.8% to 2.4% and earnings between $1.08 and
Stage Stores now expects fiscal 2012 sales between $1,605 million
and $1,620 million. Previously, it had predicted sales of $1,592
million to $1,615 million.
Earnings Estimates Climbing
The Zacks Consensus Estimate for fiscal 2012 rose 3.4% to $1.23 per
share over the last 60 days, implying year-over-year growth of
33.9%. For fiscal 2013, the Zacks Consensus Estimate is $1.40 per
share, increasing 6.1% over the same time frame, and marking
year-over-year growth of 13.4%.
Stage Stores currently trades at a forward P/E of 18.82x, on par
with the peer group average. Its price-to-book ratio of 1.67
reflects a substantial discount of 50.3% to the peer group average
of 3.36. Similarly, the price-to-sales ratio reflects a discount of
42.7% to the peer group, with shares trading at a multiple of 0.47.
The company's compelling fundamentals are well supported by its
long-term estimated EPS growth rate of 15.1%.
Chart Echoing Strength
Barring a few occasional pull backs, shares of Stage Stores have
been steadily rising since the beginning of the year. The stock
gained momentum on October 1, when the company reported strong
comparable-store sales results, and rose 9% within three days to
hit a 52-week high of $23.18 on October 4. The stock has been
consistently trading above its 200-day moving average since May 10,
2012. It has also remained above its 50-day moving average since
May 16, 2012. Volume is fairly strong, averaging roughly 317K
daily. The year-to-date return for the stock is 65.6% compared with
the S&P 500's return of 14.4%.
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 names such as Bealls, Goody's,
Palais Royal, Peebles and Stage, while its off-price chain carries
the Steeles name. 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. (
Want More of Our Best Recommendations?
Zacks' Executive VP, Steve Reitmeister, knows when key trades are
about to be triggered and which of our experts has the hottest
hand. Then each week he hand-selects the most compelling trades and
serves them up to you in a new program called
STAGE STORES (SSI): Free Stock Analysis Report
To read this article on Zacks.com click here.