PSUN - A contrarian pick
Pacific Sunwear - a specialty retailer of everyday casual apparel, footwear and accessories primarily for teen between age 12 - 24. It operates 3 brand mall-based chain store under the name "PacSun", "PacSun Outlet", and "d.e.m.o". PSUN fashion influence is driven by snowboarding, skateboarding, surfing and companies that are associated with the sports (e.g. VLCM)
In the last 3 years, PSUN is a typical growth company, with an average 20% revenue growth, and more than 50% EPS increase. In parallel to its fast growth, the company successfully maintains its profitability - ROA and ROE is 18% and 26% respectively.
The company bought back over stocks on Dec30, 2005, and Feb28, 2006, at around 24.9 and 23.8, around 10% premium compared to today's price.
At $22.15, the company P/E is valued at less than 14, a 10-year low since 1996; and 40% lower than its peer group - apparel industry average P/E is 24.
Its Feb2006 sales is lower than the street expectation, and maybe a sign of slowing growth. In my opinion, that is already priced in, and consider the stock a value buy.
While researching this stock, I find fellow investors that echoed a similar view and published fine article1 and article 2 weeks ago, that discussed the subject in greath depth. Recommend reading.
In the last 3 years, PSUN is a typical growth company, with an average 20% revenue growth, and more than 50% EPS increase. In parallel to its fast growth, the company successfully maintains its profitability - ROA and ROE is 18% and 26% respectively.
The company bought back over stocks on Dec30, 2005, and Feb28, 2006, at around 24.9 and 23.8, around 10% premium compared to today's price.
At $22.15, the company P/E is valued at less than 14, a 10-year low since 1996; and 40% lower than its peer group - apparel industry average P/E is 24.
Its Feb2006 sales is lower than the street expectation, and maybe a sign of slowing growth. In my opinion, that is already priced in, and consider the stock a value buy.
While researching this stock, I find fellow investors that echoed a similar view and published fine article1 and article 2 weeks ago, that discussed the subject in greath depth. Recommend reading.
posted by Siyu LI at
4:51 PM
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