Attention, Jim Cramer-watchers. One of the goateed stock oracle's favorite companies is due to report earnings on the morrow. Which one? (I know, there are so many, and they change so often .)

Well, the title should have clued you in by now, but just to be sure, it's Nasdaq newcomer and "urban fashion" hawker Citi Trends (NASDAQ:CTRN). The Q4 and full-year 2005 numbers are due out after the market closes on Tuesday.

Wall Street Wisdom:

  • General consensus. In addition to Mr. CNBC himself, seven professional analysts follow Citi Trends. Two of them rate the stock a buy; the five others give it a hold.
  • Revenues. According to Yahoo! Finance, none of the analysts have posited sales numbers for the company.
  • Earnings. They do have an earnings target, however: $0.56 for the quarter, which would make for 27% growth against last year's $0.44 in profits per diluted share. For the year, analysts expect to see $1.12 per share. Interestingly, the company's own projections were, at last report, for $1.06 to $1.09.

Margin watch:
Citi Trends has been public for less than a year. Hence, we've got an abridged margin history to work with. Still, five quarters should be enough to give us an idea as to where the company is trending.

Margins

10/04

1/05

4/05

7/05

10/05

Gross

37.2%

37.4%

37.6%

37.8%

38.3%

Op.

5.4%

6.2%

6.4%

6.2%

6.6%

Net

3.0%

3.6%

3.8%

3.7%

4.3%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ending in the named months.

Foolish lookout:
The trend seems to be "up." Maybe not 90 degrees straight up, but certainly up. The rolling gross margin shows some improvement over the past 15 months. Operating margins last quarter were about 22% better than they were a year previously, and the net improved by twice that amount.

Free cash flow has been negative for the past three quarters -- but that's not unusual for a retailer. As with most companies in this class, it's in Q4 that all the money is made, and that's the quarter we'll be hearing about tomorrow.

Valuation metrics:
Citi Trends shares change hands for 44 times trailing profits and 50 times the company's $10.3 million in trailing-12-month free cash flow. Yet analysts predict only 20% annualized earnings growth over the company's next five years. Either way, the shares look overvalued.

So while I'm agnostic (and honestly, indifferent) as to whether Citi Trends will "beat" its numbers tomorrow, as a long-term investment, this one looks too expensive by far.

Fool contributorRich Smithhas no interest, long or short, in Citi Trends.