Why True Religion Shares Soared
Feb 7th 2013 4:14PM
Updated Feb 7th 2013 8:15PM
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of designer jeans company True Religion surged 22% today, after its quarterly results and outlook topped Wall Street expectations.
So what: The stock has been hammered over the past year as increasing competition has weighed heavily on results, but today's fourth-quarter beat -- $0.55 on revenue of $137 million versus the consensus of $0.53 and $130 million, respectively -- coupled with upbeat full-year guidance, suggests that the worst may be behind it. In fact, gross margins even widened 20 basis points over the year-ago period, to 64.3%, giving Wall Street a much better feeling about its business mix going forward.
Now what: Management now sees full-year 2013 EPS of $1.89-$1.95 on revenue of $509 million-$513 million, nicely above Wall Street's view of $1.86 and $495 million.
According to Chairman and CEO Jeffrey Lubel:
As we start 2013, our plan is to enhance our men's merchandise offering with sportswear innovation and reestablish the True Religion Brand Jeans women's collection with updated, well-edited core basic denim bottoms and fashion-forward concepts .
With zero debt and a still-reasonable forward P/E of 14, betting on the success of that plan might even be worth the risk.
Interested in more info on True Religion? Add it to your watchlist.
The article Why True Religion Shares Soared originally appeared on Fool.com.Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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