Date: 10 March 2009
Price: $18.74
P/E: 3.7
FP/E: 8.1
P/B: 0.8
Yield: 4.2%
Debt/Eq: 0
Company Description
Trendy, expensive clothing retailer.
Past 10 years
Actually looks pretty good. Sales and earnings have consistently grown. Free cash flow has been forthcoming, and book value has increased. They've never had any debt.
Pros
It's all about the history. This company has been very successful over the past 10 years - typically trading between 12 and 22 times earnings. So it's very cheap right now on any measure.
Cons
The downside is that the next couple of years are expected to be pretty grim. The mean earnings forecast for 2009 is 3.29 (giving P/E of around 5.9) and for 2010 it's 1.78 giving a P/E of 10.x. The company itself described Q42008 as a disaster for retailers (sales were generally down around 25% on last year), and gave the following comments on the upcoming year:
"The Company anticipates a difficult selling environment to persist throughout 2009 and believes there may be significant volatility in sales levels."
Of course this is all market worry rather than company specific concerns - and there doesn't seem to be much doubt that Abercrombie would remain profitable, just at a reduced level.
Conclusion
Yes - moderate buy.
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