Francesca’s Holdings (FRAN) is #1 on the list of stocks I want to purchase (stocks on my radar). FRAN is over $30 now and with a P/E of 33 it’s selling for around where it should. If the stock dips to $25 I want to buy in.
One Year Chart
This young stock has had a nice year but that run was not without risk. Earlier in 2012 there were some warnings by other specialty retailers — warnings that sent the stocks down. So when FRAN was “cheap”, there was risk this company could miss too.
But FRAN didn’t miss. In fact the company has beaten the street each quarter since analysts started doing estimates (FRAN public in July 2011). The Earnings Table shows the company beat by a penny 4QtrsAgo, then 3 cents 3QtrsAgo. The company beat by 5 cents in each of the last two quarters — so the beatdowns have accelerated, and that’s a good thing.
Fair Value
The only negative is this stock is selling where it should. There’s little upside to Fair Value now. I would love to get FRAN at 25 times earnings. The company should make around a dollar in profits this year, so my target is $25.
Sharek’s Take
Francesca’s is one of the best young retailers to own. The Earnings Table is nearly perfect. The only negative besides the stock not being on sale is the fact Annual Profit Estimates aren’t flying higher (also shown in the Earnings Table). During the last three quarters 2012 estimate have increased from $0.81 to $0.90 and now $0.97. Those are good increases, but not great. I think we need to see big jumps to have this stock take off and leave us behind. I think I’ll get my chance to buy FRAN for clients in the mid-$20s.
View the Earnings Table here.View the Ten-Year Chart here.
