寻找美股中服装零售板块的明星股
逍遥投资派的第86篇原创
US Stock Daily Research 32: Taking stock of the apparel retail sector
【Analysis results at the end 👇 】
1
Today is April 25, 2022, pre-market on Monday in the US stock market, let's take stock of the apparel retail sector. A total of 35 stocks, with market cap ranging from 11.85 million to 73.7 billion, with 30 stocks having a market cap of over 0.3 billion, let's focus on these 30 stocks.
In terms of PE ratio, there are 6 stocks below 0, 13 below 8.5, 8 between 8.5 and 25, and 3 above 25. The sector's profitability and valuation are moderate.
2
Let's first look at the 13 stocks with PE ratios below 8.5
$Foot Locker (FL.US)$It's a shoe store I often visit with a flagship store at Jewel mall in Singapore. Revenue, except in 2021, has maintained slow growth, but operating profit has been disappointingly declining for 4 years, surging by 147% in 2022, and net income had two surges, one by 90.5% in 2019 and one by 176% in 2022. Note that the company's fiscal year ends on January 29, hence the discrepancy in years compared to most companies.
The income statement explains that operating profit did not increase with revenue growth in 2018 due to the increase in the proportion of main operating costs and operating expenses. In 2019 and 2020, it was mainly because the proportion of sales and management expenses increased significantly.
The income statement also explains that the surge in net profit in 2019 was due to the 'other special expenses' reaching 0.2 billion in 2018, while in 2019 this item was only 37 million. The surge in 2022 was mainly due to the low base in 2021, the decrease in the proportion of operating costs, and the additional net income reached 0.222 billion. Excluding other net income, the net profit for 2022 is 0.81 billion, still an increase of 0.1 billion compared to 2020, resulting in a corresponding PE of 3.44, which is also very low.
Operating net cash flow has been in the positive range, with free cash flow also positive over the past 5 years. The current current ratio is 1.36, the quick ratio is 0.54, indicating some cash flow risks.
The asset-liability ratio suddenly rose from 34.4% in 2020 to 62%, then slightly decreased over the next 2 years. Currently, inventory is 1.266 billion, accounting for 14% compared to the revenue of 8.96 billion, roughly less than a two-month inventory. Accounts receivable are 0.14 billion, with fewer credit sales in retail. Goodwill and intangible assets increased from 0.18 billion in 2022 to 1.25 billion, indicating some acquisitions. Accounts payable are 0.68 billion, with annual net interest expenses of 14 million, which is not considered high.
The current PE is 3.4, PB ratio is 0.86, with discounts being significant enough, making it a choice. (⭐️⭐️⭐️)
$Children's Place (PLCE.US)$Over 5 years, revenue declined in 2020 and 2021, but increased in the other 3 years, showing overall growth. Operating profit has been declining since 2019, entered a loss in 2021, and saw a significant increase in 2022 to turn the loss around. The trend of net profit is opposite to operating profit in 2018 and 2019, but consistent in the recent 3 years.
In the income statement, the decrease in revenue in 2019 was due to the increase in the proportion of main operating costs, and the loss in 2021 was because the main operating costs did not decrease with the revenue decline, but the pandemic impact should be one-off.
Currently, the market cap is 0.66 billion. If calculated based on the 2019 net profit of 0.1 billion, the PE ratio would be 6.6. However, the company's revenue growth in 2022 compared to 2019 is minimal, raising doubts about the company's growth prospects.
Current quick ratio is 0.98, quick ratio is 0.13, cash flow is very tight. Short-term borrowings are 0.175 billion, and current cash is only 0.055 billion.
Overall, the risk seems not small. It is not considered for the time being.
$Hibbett Sports (HIBB.US)$In the past 5 years, there was only a slight decrease in 2018, with the remaining 4 years experiencing rapid growth in nearly 3 years. Operating profit decreased for 3 years from 2018 to 2020, sharply increased by 227% in 2021, and increased by 93.3% in 2022.However, from the quarterly report, there has been a year-on-year contraction in Q4 of 2022.The future growth rate is showing a downward trend; the net income curve is similar to the operating profit curve, decreasing for 3 years, then sharply increasing by 171.6% in 2021, and growing by 134.7% in 2022.
The income statement shows that the surge in 2021 profits was due to the improvement in gross profit (32.4 → 35.5%) combined with rapid revenue growth, and the decrease in operating expenses as a proportion. In 2022, the gross profit margin further increased to 38.2%, operating expenses as a proportion further decreased, along with rapid revenue growth, these three factors combined to result in a significant increase in net profit.
The income statement looks very clean, without various 'other' items.
Operating cash flow and free cash flow have been consistently positive, with a current ratio of 1.42, quick ratio of 0.16, and cash flow is very tight.
Asset liability ratio is 58.6%, currently only 17 million in cash, 13.61 million in accounts receivable, 0.2 billion in inventory, and can sell 0.14 billion per month; short-term leasing liabilities of 70 million, 85.65 million in accounts payable, should be sufficient to cover.
Currently 4 times PE ratio, 2 times PB ratio, can be cautiously selected (⭐️)
$Destination XL Group (DXLG.US)$Revenue declined significantly only in 2021 over 5 years, with consecutive operating losses for 4 years, turning profitable in 2022 with 59.64 million net income; EPS curve very similar.
The main reason for the profit in 2021 was the increase in gross margin from around 44% to 49.5%, with a decrease in operating expenses ratio. However, whether the profit for the full year in 2022 can be sustained is difficult to determine, the future trend of the high 49.5% gross margin is uncertain, with a thin safety margin of 5.7 times PE and 5 times PB ratio.
$Shoe Carnival (SCVL.US)$Revenue only declined by 5.8% in 2021 over 5 years, with operating profit slightly decreasing in 2018, dropping by 60% in 2021, then surging by 850% to 0.21 billion in 2022, similar trend in net income.
The main reason for the sharp profit increase in 2021 was the rise in gross margin from around 30% to 39.6%, along with a decrease in operating expenses ratio.
Operating cash flow and free cash flow have been positive over the past 5 years, increasing overall, with a current ratio of 2.88, quick ratio of 0.95, cash flow is very secure.
Asset liability ratio is 44.3%, accounts receivable of 14.16 million, inventory of 0.285 billion, compared to revenue of 1.33 billion are relatively normal. Goodwill and intangible assets increased from 0 to 44 million in 2022, indicating likely acquisitions.
Currently at a 5.7 times PE ratio, if calculated based on the average net income of 0.0855 billion for 2021 and 2022, the PE ratio would be 10.2. Overall, it can be cautiously selected (⭐️).
$Buckle Inc (BKE.US)$The revenue decreased in the first two years over five years, then grew in the following three years, especially a significant increase of 44% in 2022. The operating profit curve matches well, with a 100% growth in 2022. The net income has been increasing for four years since 2019, and the EPS curve aligns well. In 2019, the income tax decreased by 18 million, causing a rise in net income. The gross margin has been steadily increasing in the past two years, from 42% to 50.4%, leading to rapid growth in net income.
Operating cash flow and free cash flow have been positive over the past five years, showing overall increase. The current ratio is 1.57, the quick ratio is 1.12, indicating a very safe cash flow.
With a 60% debt-to-asset ratio, accounts receivable of 12 million, inventory of 0.102 billion, and a comparison to a 1.3 billion revenue, the company has very low liabilities compared to revenue, without any interest-bearing debt.
Currently at a 6 times PE ratio, if calculated based on the average net income of 0.19 billion for 2021 and 2022, the PE ratio would be 8.2. It is a viable choice (⭐️⭐️).
$Victoria's Secret (VSCO.US)$Just listed in August 2021, the accounts receivable has been decreasing over the past three years, with a debt-to-asset ratio rising to 94%. It might be advisable to wait for the next financial report to make a decision.
$Designer Brands (DBI.US)$The revenue declined by 36% in 2021, only recovering to the 2019 level in 2022. The operating profit significantly improved in 2022, and the net income showed recovery growth after a substantial loss in 2020, but the average over two years is still negative. Currently at a 7.2 times PE ratio, it might be worth waiting for the next financial report.
$Urban Outfitters (URBN.US)$After three consecutive years of revenue growth, a 13.4% decline was observed in 2021, followed by a significant increase of 32% in 2022. However, the operating profit saw a significant decline over three years, attributed to the decrease in gross margin, indicating a weak pricing ability of the company. The instability of the gross margin can lead to unpredictable profitability. Currently at a 7.6 times PE ratio, it is not very attractive.
$American Eagle (AEO.US)$Revenue only experienced a 12.8% decline in 2021, while operating profit plummeted by 97% in 2021, skyrocketing to double the level before the outbreak; similarly, net income and earnings per share also increased.
In 2021, 'impairment of capital assets' and 'other special expenses' totaled 0.28 billion, a significantly higher amount compared to other years. In 2022, the gross margin increased from the previous 36% to 40%, leading to a substantial boost in net income.
The current PE ratio is 7.6, which is not very attractive.
$Zumiez (ZUMZ.US)$Revenue only experienced a 12.8% decline in 2021, while operating profit and net income have been growing steadily for 5 years. The earnings per share curve aligns closely with the net income curve.
The recent profit improvement is mainly due to an increase in revenue, an increase in gross margin, and a decrease in the proportion of operating expenses.
Operating net cash flow and free cash flow have been positive for the past 5 years, showing an overall increase. The current liquidity ratios are 2.43 for the current ratio and 1.67 for the quick ratio, indicating strong cash flow.
The asset-liability ratio is 46%, with accounts receivable at 14.42 million and inventory at 0.129 billion, which is quite normal compared to the 1.2 billion in revenue. There are no interest-bearing liabilities.
Upon analysis, a common trend identified is that these apparel retail companies significantly increased their debt ratio in 2020 (effectively 2019), mainly due to the addition of 'lease liabilities.' Moving forward, it is advisable to pay attention to the reasons in industry reports. Additionally, a noteworthy commonality is the substantial increase in gross margin in 2022 for all companies.
Currently, the PE ratio is 7.8, the PB ratio is 1.58. Even calculating the PE ratio based on the net income of 76.22 million in 2021, it is still less than 10. A possible selection (⭐️⭐️).
$Genesco (GCO.US)$The overall revenue has been declining over the past 5 years, with only 2 years of profit in net income. Currently at an 8 times PE ratio, and a 1.5 times PB ratio, more positive data support is needed.
$Abercrombie & Fitch (ANF.US)$Revenue only saw a 14% decline in 2021 over the past 5 years; operating profit saw significant declines in 2020 and 2021 but surged by 580% in 2022; net income had significant declines in 2020 and 2021, fell into loss in 2021, and turned around in 2022.
Comparing 2020 and 2022 in the income statement, revenue increased by 90 million, costs decreased by 70 million, expenses decreased by 0.1 billion. As a result, operating profit increased by 0.26 billion, with the expense reduction attributing to the decrease in selling expenses.
Furthermore, the gross margin has increased from the previous 60% to 62.3%, significantly surpassing the industry average level.
Currently, the PE ratio is 8.3, the PB ratio is 2.1. Will wait for the subsequent financial reports before making a decision.
3
Let's take a look at the 11 stocks with a PE ratio above 8.5.
$The Cato (CATO.US)$Revenue has been declining for 4 years, with a recovery growth of 33.8% in 2022, but it has not reached the pre-epidemic level. Operating profit slipped into loss in 2021 and basically recovered to pre-epidemic levels in 2022, with net income following a similar trend.
Currently, the 8.5 times PE ratio discount is not sufficient.
$Guess (GES.US)$After 3 years of revenue growth, there was a 30% decline in 2020, followed by a recovery growth of 38% in 2021, but still below pre-epidemic levels. Operating profit, except for 2020, has shown high-speed growth for 4 years. The net income curve follows a similar pattern.
The gross margin increased from 37% to 45% in 2022, forming the basis for a significant profit increase in 2022, but whether such a large change is sustainable needs further observation.
Currently, the attractiveness of the 8.9 times PE ratio is not significant.
$Carter's (CRI.US)$After 3 years of revenue growth, there was a 14% decline in 2020, followed by a recovery growth of 15.3% in 2021, still below pre-epidemic levels. Operating profit declined for 3 years out of 5, with a dramatic increase of 112% in 2021; net income declined for 3 years out of 5, with a dramatic increase of 210% in 2021.
Currently, the 11.5 times PE ratio needs more growth data support.
$Duluth Holdings (DLTH.US)$Revenue has been growing consecutively for 5 years, but operating profit saw significant declines in 2020 and 2021, mainly due to the decrease in gross margin. The gross margin recovered to 54% in 2022, and profit returned to normal. This growth, considered cyclical due to changes in the gross margin, is more reasonable. The current 13 times PE ratio needs better growth data.
$Chico's FAS (CHS.US)$Revenue has been declining for four consecutive years. In 2022, there was a recovery growth of 37%, but it did not reach the pre-epidemic level. Net income just turned profitable in 2022, and the current 14 times P/E ratio requires better growth data.
$Gap Inc (GPS.US)$Revenue is growing slowly, with overall declining net income. There is not much change in the gross margin, and the current P/E ratio of 17.5 is too high.
$Ross Stores (ROST.US)$After three years of revenue growth, it decreased by 22% in 2021, then recovered by 51% in 2022; operating profit dropped by 91% in 2021, then recovered in 2022; similarly with net income, the 5-year average growth rate is 9%, and the current P/E ratio of 21 is too high.
$TJX Companies (TJX.US)$After three years of revenue growth, it decreased by 23% in 2021, then recovered by 51% in 2022; operating profit dropped by 86.8% in 2021, then recovered in 2022; similarly with net income, the 5-year average growth rate is 7.4%, and the current P/E ratio of 23 is too high.
$Burlington Stores (BURL.US)$After three years of revenue growth, it decreased by 21% in 2021, then recovered by 62% in 2022; operating profit dropped by 155% in 2021, then recovered in 2022; similarly with net income, the 5-year average growth rate is 13.6%, and the current P/E ratio of 35 is too high.
$Boot Barn Holdings (BOOT.US)$Revenue, operating profit, and net income have maintained uninterrupted growth for 5 years. The EPS has an average growth rate of 40% over 5 years, and showed high-speed growth for 3 quarters in 2022, with a P/E ratio of 45, and a TTM P/E ratio of 16.
One of the reasons for the continuous increase in profit over 4 years is that the gross margin has increased from 30% to 33%.
Operating cash flow has been positive for 5 years on average, except for 2020; free cash flow has been positive excluding 2020, with a current ratio of 1.69, quick ratio of 0.39. The cash flow is relatively poor, but it should not affect normal operations.
Before the annual report is released, it is advisable to choose carefully (⭐️).
$Lululemon Athletica (LULU.US)$Revenue has maintained growth for 5 years. Operating profit slightly decreased by 4.4% in 2020, while net income decreased by 15% in 2018, 9% in 2020. The 5-year average growth rate is 26%, and earnings per share growth rate is relatively close.
Currently, the P/E ratio of 48 times does not provide enough discount.
4
Finally, look at the 6 loss-making stocks with P/E ratios below 0.
$On Holding (ONON.US)$、 $Rent the Runway (RENT.US)$Net losses have continuously expanded for 2 years, so exclude.
$Stitch Fix (SFIX.US)$Net income has been in continuous losses for 2 years. Even calculated based on the highest net profit of 45 million in 5 years, the current P/E ratio has reached 22.
$Torrid (CURV.US)$Net income has been declining consecutively for 3 years, falling into a loss range in 2022, with no signs of improvement.
$Allbirds (BIRD.US)$Net losses have been expanding continuously for 2 years. Mainly caused by a surge in management expenses.
$Lulus Fashion Lounge (LVLU.US)$Net income is positive, but there are a large number of preferred shares, with a dividend payout of 0.123 billion. The number of preferred shares has now been reduced to 0. Let's wait for the subsequent financial reports to make a determination.
Overall, the revenue growth of the apparel retail sector is very fast, with recent increases in gross margin. This has led to a significant increase in the recent annual profit level, but the sustainability is in doubt. A total of 6 stocks have been selected.
Apparel retail sector investment index:⭐️⭐️
1. $Foot Locker (FL.US)$⭐️⭐️⭐️
2. $Buckle Inc (BKE.US)$ ⭐️⭐️
3. $Zumiez (ZUMZ.US)$ ⭐️⭐️
4. $Hibbett Sports (HIBB.US)$ ⭐️
5. $Shoe Carnival (SCVL.US)$ ⭐️
6. $Boot Barn Holdings (BOOT.US)$ ⭐️
1. $Foot Locker (FL.US)$⭐️⭐️⭐️
2. $Buckle Inc (BKE.US)$ ⭐️⭐️
3. $Zumiez (ZUMZ.US)$ ⭐️⭐️
4. $Hibbett Sports (HIBB.US)$ ⭐️
5. $Shoe Carnival (SCVL.US)$ ⭐️
6. $Boot Barn Holdings (BOOT.US)$ ⭐️
Star rating description:
⭐️⭐️⭐️: Best choice, with obvious profit and growth advantages, at a significant discount.
⭐️⭐️: Value or price slightly lower than the best choice.
⭐️: Only suitable for certain investment portfolios, such as small cap stocks, high-growth stocks, crisis stocks, flawed stocks, etc.
⭐️⭐️⭐️: Best choice, with obvious profit and growth advantages, at a significant discount.
⭐️⭐️: Value or price slightly lower than the best choice.
⭐️: Only suitable for certain investment portfolios, such as small cap stocks, high-growth stocks, crisis stocks, flawed stocks, etc.
Portfolio recommendations:
If less than 10, only choose to invest in 3-star rated index stocks.
If less than 30 stocks, then only choose to invest in index 2 star and 3 star stocks.
If more than 30 stocks, then 1 star to 3 star can all be chosen.
An investment indicator can be set for each star rating, for example, 1 star $200, 2 stars $400, and 3 stars $600-800.
If less than 10, only choose to invest in 3-star rated index stocks.
If less than 30 stocks, then only choose to invest in index 2 star and 3 star stocks.
If more than 30 stocks, then 1 star to 3 star can all be chosen.
An investment indicator can be set for each star rating, for example, 1 star $200, 2 stars $400, and 3 stars $600-800.
If you understand the value investment method, feel free to follow for daily updates 📈
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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Peter YCS : What price will it drop to...?
逍遥投资派 OP Peter YCS : Currently, the overall decline is due to insufficient market capital, so we have to wait until the interest rate hike cycle has passed.
Peter YCS : Is this company still around after the interest rate hike...
Peter YCS : I'm waiting for 2 yuan...