Ann Taylor Stores Corp. - Momentum

Ann Taylor Stores Corp. (ANN) recently hit a new multi-year high at $27.84 after reporting strong Q3 results in mid November that included a 24% earnings surprise. With a bullish next-year estimate calling for 30% growth and

Company Description

Ann Taylor Stores Corp., through its subsidiaries, operates as a specialty retailer of women's apparel, shoes and accessories primarily in the United States. The company was founded in 1986 and has a market cap of $1.56 billion.

With retail sales showing some solid signs of strength, retail stocks have been on the upswing. That group includes Ann Taylor, recently jumping to a new multi-year high on strong Q3 results from mid November that easily beat expectations.

Third-Quarter Results

Revenue for the period was up 9% to $505 million. Earnings also came in strong at 42 cents, 24% ahead of the Zacks Consensus Estimate.

The good results were driven by a big rebound in same-store sales, showing 11.7% growth across all segments after declining 13% in the same period last year. Ann Taylor comparable store sales were up an amazing 57% while the Ann Taylor e-commerce division was up 11.3%

Balance Sheet

Ann Taylor also continues to strengthen its balance sheet, with cash and equivalents up $90 million to $224 million with no debt.

Estimates

We saw some pretty decent movement in estimates off the good quarter, with the current year climbing 9 cents to $1.26 and the next-year estimate gaining 15 cents to $1.64, a bullish 30% growth projection.

Valuation

But in spite of the recent gains, ANN still has a very reasonable valuation, trading with a PEG ration (PE/Growth) of just .70%, well below the traditional value benchmark of 1.

6-Month Chart

On the chart, ANN has been strong with the market since early September, recently hitting a new multi-year high at $27.84 ahead of the holidays. The stochastic below the chart is signaling that shares remain safely away from over-bought territory. Look for support from the trend line on any weakness, take a look below.

Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.
 
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