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Susquehanna Cheers The Children's Place 'Stringent Control' On Inventories, Expenses; Upgrades

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  • Childrens Place Inc (NYSE: PLCE) shares have appreciated by more than 7 percent in the last year and closed at $58.20 on August 25.
  • Susquehanna analyst Thomas Filandro upgraded the company from Neutral to Positive, while raising the price target from $68 to $69.
  • Filandro believes that continued improvement in inventory utilization and management’s strong commitment towards regular distribution of cash to shareholders bode well for the stock.

Children’s Place reported a loss per share of $0.33 for 2Q15, in-line with expectations. The figure was in-line, despite deceleration in traffic and a 3.5 percent decline in comps. Analyst Thomas Filandro said the company continued to control inventories and expenses, while fueling MMU and AUR expansion, in a challenging traffic quarter.

“Higher MMU and AUR supported GM expansion of 40 bps and well-managed expense controls resulted in 60 bps of leverage and a dollar decline in excess of 6%,” Filandro added.

The company’s strengths lie in continued improvement in inventory utilization, coupled with “lower AUC into 2H15 and a positive LSD comp trend in BTS.”

Regular distribution of excess cash to shareholders through share repurchases and dividends, averaging $85 million over the past five years, depicts management’s strong commitment, the Susquehanna report stated.

“The company remains in a strong financial position, with 2Q15-end cash and short-term investments of ~$10 per share, or ~17% of market capitalization,” Filandro wrote.

The company’s fleet optimization program remains on track, with 200 stores expected to be closed through 2017. “Closures are anticipated to positively impact OPM by 100+ bps due to sales transfer and the elimination of underperforming stores,” the report added.

Latest Ratings for PLCE

DateFirmActionFromTo
Nov 2017BMO CapitalMaintainsMarket Perform
Nov 2017BuckinghamMaintainsBuy
Jun 2017Telsey Advisory GroupUpgradesMarket PerformOutperform

View More Analyst Ratings for PLCE
View the Latest Analyst Ratings

Posted-In: SusquehannaAnalyst Color Upgrades Price Target Analyst Ratings

 

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