Several consumer-goods companies reported earnings this week, and a few made some notable stock moves on the news. Could there be some compelling values among the wreckage? And which ones might be value traps? Let's review the situation and dig into how our Motley Fool CAPS community perceives these stocks.
|
Company |
CAPS Rating (out of 5) |
Change in Earnings Per Share |
Revenue Change |
Impact on Price |
|---|---|---|---|---|
|
Revlon (NYSE:REV) |
* |
N/A |
11% |
6% |
|
K-Swiss (NASDAQ:KSWS) |
*** |
(39%) |
(19.40%) |
(9%) |
|
Maidenform (NYSE:MFB) |
**** |
(13.50%) |
(12%) |
(6.70%) |
|
Ralph Lauren (NYSE:RL) |
*** |
(14.80%) |
11% |
2.70% |
|
Heelys (NASDAQ:HLYS) |
* |
(50%) |
(31.2%) |
(8%) |
Revlon's bright red lipstick ... er, bottom line
Revlon may have reported an 11% increase in revenue, but it's still not profitable. The good news that affected its stock price is that it narrowed its loss by a long shot. It reported a loss of $10.4 million, or $0.02 per share, compared with a loss of $100.5 million, or $0.24 per share, this time last year. A glance at its financial results shows that the company has had only a few profitable quarters in the past decade -- and it isn't expected to be profitable over the next year or two, either. Ouch!
Regardless, Revlon's stock increased 6% on the news. Talk about putting lipstick on a pig! Consider, though, that our CAPS community has been unimpressed -- the Foolish community-intelligence database has awarded Revlon a lowly one star out of a possible five. Meanwhile, Revlon's stock performance has been so poor that its ticker is no longer even ratable in CAPS. Since the price has dipped below $1.50 per share, it's now in penny-stock territory. Perhaps it's just as well to leave this one alone.
Short-lived fame
Just as Crocs (NYSE:CROX) is all the rage right now, Heelys experienced its 15 minutes of fame last year. But the company has been wheeling itself down a steep hill, and it's dragging its earnings and revenue down along with it. Its one-star status in the CAPS community seems to coincide with the prevailing notion that its high-growth days are over, unless it finds some compelling new footwear products to help it roll away from its reliance on its trendy wheeled heels. Some of us don't think the Gamer is going to do the trick. Even CAPS player scraccag, who has an "outperform" on Heelys, says in his pitch: "I am wondering what the heck they think the appeal of the ... Gamer shoe is."
Bargain-bin bras
Ralph Lauren and K-Swiss fare a little better in their CAPS rankings, but perhaps the most interesting investing idea among our list of contenders is Maidenform. As you can see in the table, its most recent quarter wasn't too inspiring, and its stock price headed south. However, last quarter shaped up nicely, and it currently has a promising four-star rating in CAPS. Plus, its selections for full-figured women are fueling competition with Limited's (NYSE:LTC) Victoria's Secret. Could it be that this is the best bargain-priced stock idea of the five?
Although I'm not sure what to make of Littlehogger's proclamation that "Men wear bras, too!" (have I missed something in cutting-edge male fashion?), xdogg points out that the stock is indeed in the bargain bin: "New 52-week low for a solid company works for me! Nice revenue growth, very low P/E, and PEG ratio around 0.9." Sure enough, it's trading at just nine times forward earnings -- even though it's expected to grow earnings by 12% in 2008.
Out of our five picks here, it does seem that this one may be the most worthy of a look.
