Market Overview

Pier 1 Imports Earnings Preview: Little Impact from Hurricane Sandy

Pier 1 Imports (NYSE: PIR), which recently announced a strong start to the holiday shopping season, is scheduled to report its third-quarter fiscal 2013 results Thursday, December 13, before the markets open. Investors will be looking to see if anything has changed since the recently announced preliminary results, which forecast revenue and profit growth despite store closures due to Hurricane Sandy.

Expectations

Analysts on average predict that Pier 1 will report that revenue for the quarter rose almost nine percent year-over-year to $416.56 million, which is less than the recent guidance. The retailer's per-share earnings are expected to come to $0.24, which would be up from $0.21 per share in the same quarter of last year. That consensus earnings estimate has slipped a penny in the past 60 days. Because Pier 1 offers preliminary results, consensus EPS forecasts have been on the nose in recent quarters.

Second-quarter results, or its "12th consecutive quarter of strong comparable store sales gains and profit growth," were attributed primarily to increases in store traffic and a higher average ticket. The company also continued to repurchase shares and trumpeted its new online initiative. But the share price pulled back about four percent in the days following the second-quarter report.

Looking ahead to the current quarter, which includes most of the holiday shopping season, the analysts' consensus forecast calls for sequential and year-over-year growth in both EPS and revenue. So far, full-year EPS are expected to be more than 19 percent higher, relative to the previous year, on a rise of about 10 percent in revenues.

The Company

Pier 1 Imports is a retailer of imported decorative home furnishings and gifts. It has more than 1,000 stores in North and Central America, and a market capitalization near $2 billion. The company was founded in 1970, is based in Fort Worth, Texas, and Alexander W. Smith has been the president and chief executive since 2007.

Competitors include Bed Bath & Beyond (NASDAQ: BBBY), Restoration Hardware (NYSE: RH) and Williams-Sonoma (NYSE: WSM). Quarterly results from Bed Bath & Beyond and Williams-Sonoma are due next week, and analysts expect to see year-over-year EPS and revenue growth from both of them. Restoration Hardware just recently has its initial public offering and is scheduled to post its first quarterly report tomorrow.

During the three months that ended in November, Pier 1 raised its full year guidance, declared a quarterly dividend and saw strong Black Friday sales.

Performance

The long-term EPS growth forecast is more than 19 percent, and the price-to-earnings (P/E) ratio is less than the industry average. The operating margin is greater than the industry average, and the return on equity is more than 44 percent. The number of shares sold short is about eight percent of the float. Of the 13 analysts surveyed by Thomson/First Call who follow the stock, nine recommend buying shares, and seven of those rate it at Strong Buy. Analysts believe the stock has some room to run as their mean price target represents about 15 percent potential upside. That target price would be a level the shares have not seen since 2004.

Shares are up more than 40 percent since the beginning of the year, despite facing resistance at $20 for much of the past quarter. The share price is well above the 200-day moving average but close to the 50-day moving average. Over the past six months, the stock has outperformed Bed Bath & Beyond and the broader markets, but narrowly underperformed Williams-Sonoma.

Posted-In: Bed Bath & Beyond Pier 1 Imports Restoration Hardware William-SonomaEarnings Previews Trading Ideas Best of Benzinga

 

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