Thursday, May 27, 2010

Aeropostale ARO

Aeropostale ticker ARO is a clothing chain that caters to the young set--13 to 17 years old. I normally am not a fan of clothing stores. They tend come in and go out of fashion very fast. But this particular chain has a couple of things going for it currently. First of all their clothing is not extremely high priced. That makes it very attractive in this tight environment. Secondly, the stock is selling at a very low PE ratio in comparison to other clothing chains.

Let's take a look at the company financials.

Revenue is $2.23 billion.
LT debt is zero
Equity per share is $4.62
Return on assets is 31.6%
Market cap is about $2.6 billion.

Historical data for the company is:

2006 eps $0.67 revenue $1.2 bil
2007 eps $0.88 revenue $1.4 bil
2008 eps $1.13 revenue $1.6 bil
2009 eps $1.48 revenue $1.9 bil
2010 eps $2.28 revenue $2.2 bil

The company operates 938 stores. Of these 44 are in Canada. It also operates an E-commerce The company has begun opening stores focusing on children in the age group 7 to 12 under the name P. S. It has 14 stores under this label in 5 states.

The company just announced earnings for the first quarter of 2011 fiscal year as I write this.

eps for the quarter was $0.48 vs $0.33 for the previous year. Revenue was $464 million vs $408 million.

The current pe ratio with the current stock price at $27.14 is 11.9 for 2010 calendar year earnings. The pe ratio based on projected 2011 earnings is about 10.0.

How does this stock compare to its market segment stocks?

ARO pe 11.9 debt zero revenue growth rate 17% eps growth rate 35%
URBN pe 20 debt zero revenue growth rate 15% eps growth rate 13%