Don't bet against the power of jeans.
True Religion Apparel, Inc.
(
TRLG
) recently reported first quarter results and saw double digit same
store sales growth. This Zacks #2 Rank (Buy) is a hot retailer with
value credentials. It has a price-to-book ratio under 3.0.
True Religion makes premium men's and women's jeans and sportswear.
The jeans sell, on average, between $100 and $400. It sells in its
own retail and outlet stores as well as department stores and
boutiques in 50 countries.
It has 109 company owned retail stores in the United States, 5 in
the U.K., 4 in Germany, 4 in Canada, 4 in Japan and 1 in the
Netherlands.
True Religion Beat By 14% in Q1
On May 1, True Religion reported first quarter results and
surprised on the Zacks Consensus by 5 cents. Earnings per share
were 41 cents compared to the consensus of 36 cents.
Sales jumped 13.9% to $106.8 million. The retail stores and
Internet sales, which make up the U.S. Consumer Direct segment, saw
sales rise 22.6% to $65.5 million.
Same store sales in the 90 stores open for at least 12 full months
and e-commerce increased 13.3%. It opened one store and closed one
store in the quarter.
The U.S. Wholesale segment, which is in the specialty stores and
department stores, saw sales increase 2.8% to $21.4 million. It was
the first year-over-year increase in net sales in this segment
since the recession, in the fourth quarter of 2008.
Net sales also grew in the International segment by 3.6% compared
to the year ago. The quarter was boosted by retail sales in the
U.K. and Canada.
Plenty of Cash
The company's cash flow continued to be strong. It ended the first
quarter with $204.2 million of cash and cash equivalents, up from
$200.4 million as of Dec 31, 2011.
True Religion has no long-term borrowings. Its inventory balance as
of Mar 31, 2012 was $57.6 million, up 23.6% from the year ago
period mainly due to an expansion of the retail store count to 109
U.S. stores from 96 and 18 international stores from 8 a year ago.
First Dividend Ever
Are you a dividend lover in addition to a value investor? Now you
can get both in True Religion.
The Board of Directors authorized its first quarterly dividend of
20 cents per share. It will be paid May 29 to shareholders of
record as of May 15.
True Religion is also going to repurchase up to $30 million in
stock.
Zacks Consensus Estimate for 2012 Rises
In the last 60 days, the 2012 Zacks Consensus Estimate has risen to
$1.95 from $1.94.
This is earnings growth of 5.1% over last year.
True Religion Is A Value
Shares have taken a beating in 2012 but that has created a buying
opportunity for value investors.
In addition to a value P/B ratio, the company also has a P/E of
14.8. While that is not the cheapest P/E out there, it is just
under the 15x cut-off I use for value stocks.
True Religion has other solid fundamentals as well. It's 1-year
return on equity (ROE) of 16.8% is above the average of the S&P
500 at 13.4%.
True Religion is cashing in on the demand for luxury products.
Given the 2012 stock market rally, it is one of the few luxury
retailers that is also a value stock.
This Week's Value Zacks Rank Buy Stocks
There's plenty of value in the energy sector.
Helix Energy Solutions Group
(
HLX
) is trading at just 9.4x forward estimates even though the shares
are near 52-week highs. This Zacks #1 Rank (Strong Buy) is also a
double threat, as, in addition to value, it is expected to see
double digit earnings growth in 2012.
Read the full article.
The specialty chemical companies are still optimistic about 2012.
Rockwood Holdings, Inc.
(
ROC
) recently reported first quarter results and blew by the Zacks
Consensus by 19.6%. This Zacks #1 Rank (Strong Buy) is even cheaper
than last year, as it now has a forward P/E of 12.2.
Read the full article.
There was plenty of momentum for the specialty chemical companies
in the first quarter.
Cytec Industries Inc.
(
CYT
) recently reported its sixth earnings surprise in a row. This
Zacks #1 Rank (Strong Buy) continues to be a value stock, with a
forward P/E of 13.6.
Read the full article.
Cabela's, Inc.
(
CAB
) is a hot specialty retailer. This Zacks #1 Rank (Strong Buy) just
reported a record first quarter as gun sales remained strong. Yet
it still has value, with a price-to-sales ratio of just 0.9.
Read the full article.
Tracey Ryniec is the Value Stock Strategist for
Zacks.com
. She is also the Editor of the Turnaround Trader and Insider
Trader services. You can follow her on twitter at
@TraceyRyniec
.
TRUE RELIGION (TRLG): Free Stock Analysis
Report
To read this article on Zacks.com click here.
Zacks Investment
Research