Atlanta-based apparel maker Oxford Industries (NYSE: OXM ) recently posted its second-quarter results. Although net income fell, things aren't nearly as bad as they may seem.
Let's dig deeper.
The numbers
Revenues, at $180.6 million, were up by 26% compared to the year-ago quarter. This was mainly because of strong sales of the company's brands, which include Tommy Bahama and the recently acquired Lilly Pulitzer. But strong sales didn't translate into profits; net income for the quarter fell 64% to $2.6 million or $0.16 per share, due largely to a one-time expense of $8.2 million related to repurchasing its senior secured notes.
If you take out one-time items, the company saw adjusted earnings per share of $0.57, beating Street estimates of $0.52 per share.
Growth story
Fellow Fool Shubh Datta correctly pointed out the growth potential of the company back in June after its first-quarter earnings report. Tommy Bahama benefited from increased same-store sales, higher retail sales, and increased e-commerce sales, operating 90 retail stores this quarter.
Oxford Industries improved its revenues and margins, backed by the strength in its direct-to-customer business. Robust cash generation helped the company reduce its debt by 24% to $112.5 million and thereby decrease its interest burden.
Given the company's growth potential, let's see if it is fairly priced compared with its peers:
|
Company
|
P/E Ratio
|
| Oxford Industries |
8.2 |
|
Polo Ralph Lauren
(NYSE: RL )
|
23.5 |
|
Phillips-Van Heusen
(NYSE: PVH )
|
17.3 |
|
Abercrombie & Fitch
(NYSE: ANF )
|
30.9 |
Source: Yahoo! Finance.
Oxford's P/E makes the company look extremely inexpensive, especially in comparison to its competitors. With expected earnings growth of 13% over the next five years, the shares may be a good value right now.
The Foolish bottom line
Management seems confident about the strength of its brands. It has raised its full-year earnings outlook to $2.20-$2.30 per share. Given the momentum of Oxford Industries' revenue, I think the company has the potential to come up with good numbers in the future. What do you think?
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