Tuesday night, it'll be time for a quarterly update from True Religion Apparel
What analysts say:
- Buy, sell, or waffle? Nine analysts follow the guitar-toting little Buddha (the company's logo) these days. Two of them are buyers, one is a seller, and the other six are watching from the sidelines with a "hold" recommendation. In our Motley Fool CAPS database, 265 players have contributed their opinions to make it a three-star stock.
- Revenues. The Wall Street target is $39.9 million, a measly 12% above last year's $35.6 million.
- Earnings. The average forecast calls for $0.28 per share, same as the year-ago result.
What management says:
In the last earnings report, CEO Jeff Lubell called 2006 a year of "continued investment in our future." Retail stores are popping up in hot shopping centers across the country, and management has set its sights beyond just denim, with the ultimate goal of becoming a total lifestyle brand.
What management does:
I could name a few retailers or manufacturers that would be happy with 17% gross margins, never mind net. The generally rising cash flow trend is another bonus, and I'd like to point out that this is happening despite increased capital spending to roll out the fledgling chain of True Religion retail stores.
That said, you could certainly expect better growth from this microcap. Both revenue and earnings have decelerated for some time. True Religion is being outdone in the bottom-line growth game, not just by other smallish operations like Charlotte Russe
|
9/2005 |
12/2005 |
3/2006 |
6/2006 |
9/2006 |
12/2006 |
|
|---|---|---|---|---|---|---|
|
Gross |
50.8% |
51.3% |
51.8% |
52.5% |
52.4% |
52.9% |
|
Operating |
34.2% |
34.3% |
33.0% |
33.1% |
32.5% |
32.2% |
|
Net |
20.3% |
19.0% |
18.8% |
17.9% |
17.2% |
17.6% |
|
FCF/Revenue |
8.9% |
11.3% |
13.7% |
19.2% |
17.4% |
21.0% |
|
YOY Growth |
9/2005 |
12/2005 |
3/2006 |
6/2006 |
9/2006 |
12/2006 |
|---|---|---|---|---|---|---|
|
Revenue |
487.0% |
270.7% |
161.9% |
101.2% |
48.6% |
35.6% |
|
Earnings |
900.7% |
361.4% |
183.8% |
96.2% |
26.5% |
25.3% |
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.
One Fool says:
In many ways, this company is growing up fast. There's plenty of new management talent on board, along with design experts and that push into direct retailing.
All of that shows a serious commitment to the company's future, allaying fears of a cash-grab sellout trick based on True Religion's somewhat unusual corporate history. If that means you have to sacrifice some of the heady growth from the not-so-focused days, so be it. As long as teens want ultra-premium denim duds, there's a market for True Religion.
American Eagle is a Motley Fool Stock Advisor recommendation. To see which other companies have been recommended by Tom and David Gardner, consider a free trial today. There's no obligation to buy.
Fool contributor Anders Bylund is a longtime True Religion shareholder, but he holds no other position in any of the other companies discussed here. They don't make fashionable jeans in his size -- does anybody know Shaq's tailor? You can check out Anders' holdings if you like, and Foolish disclosure covers your backside in style.
