Apparel company Wet Seal (NASDAQ:WTSLA), fresh from its refinancing deal in May, reported respectable results for the second quarter. Compared with the year-ago quarter, revenue increased 19.5%. The net loss from continuing operations fell from a jaw-dropping $106.3 million (which included two charges totaling $79.3 million) to $11.7 million, including a $16.1 million charge, $2.1 million in cash, and $14 million in non-cash compensation.

A year ago, revenue was falling, same-store sales were in decline, and the CEO was actually demoted to the board. There was talk of a bankruptcy to help the company sort out its problems. A two-year chart shows the stock's steep decline, followed by a slow recovery as new management got introduced, stores were closed, and financing was set in place to get the company moving.

The big news of the day was $4.2 million in operating income. That's not quite a surprise, since the quarter's monthly same-store sales increases were whoppers -- up 56.9%, 59.3%, and 50.9%, respectively, for the months of May through July.

But those hoping for reassuring words about the quarters ahead will be disappointed -- the company gave no forward guidance.

While the company has $65.1 million in cash, it has come at a price. Diluted shares increased from 32.1 million to 40.4 million over the year-ago quarter. Analysts following the company do not expect a profit this fiscal year (ending in January) and see only $0.21 falling to the bottom line in fiscal year 2006 -- a 25.5 forward P/E ratio. That's high for a company that has, at least for now, just managed to tiptoe past the bankruptcy reorganization graveyard.

There are plenty of alternatives to this troubled retailer. Motley Fool Stock Advisor pick Gap (NYSE:GPS) sells for a lucky 13 times forward earnings and has almost five times as much cash as total debt. Superhot retailers Abercrombie & Fitch (NYSE:ANF) and American Eagle Outfitters (NASDAQ:AEOS) sell for 14.8 and 12.6 times forward earnings, respectively.

Wet Seal looks cheap at $5.36 a share. If it can meet analysts' expectations for earnings growth through 2006, the multiple doesn't look all that expensive. But I'm not sure I like the current valuation for a troubled company in transition, especially when its best-in-class competitors all sport a lower P/E.

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Fool contributor W.D. Crotty does not own shares in any of the companies mentioned. Click here to see The Motley Fool's disclosure policy.