True Religion Apparel, Inc. (TRLG) is making believers out of its shareholders, recently hitting a new all-time high after rallying more than 44% in October. With another strong quarter in the bag and estimates of the rise, this Zacks #1 Rank stock has faith in momentum.
Company Description
True Religion sells mens womens apparel and accessories worldwide. The company operates on the development and retail side of the business and has a market cap of $950 million.
Even though the economy has been relatively weak for the last few years, high-end consumer spending has held up rather well. That showed up in early November when True Religion reported strong Q3 results that came in ahead of expectations.
Third-Quarter Results
Revenue for the period was up 17% from last year to $108 million. Earnings also looked good at 51 cents, 4% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 16% over the last four quarters.
The company continues to see strong growth both domestically and internationally, with US Consumer Direct (store front and e-commerce) sales up 34% and International sales up 30%. Margins were also on the upswing, with gross margin up 270 basis points to 64.8%.
Financial Profile
True religion has used its earnings momentum to strengthen its financial profile, with cash and short-term investments up $54 million from last year to $182 million against no long-term debt.
Estimates
We’ve seen some a little movement in estimates off the good quarter, with the current year up 2 cents to $1.95. The next-year estimate is pegged at $2.30, a bullish 18% growth projection.
Valuation
But in spite of recent gains, the valuation picture still looks solid, with a PEG ratio of 1 in line with the benchmark for value.
12-Month Chart
On the chart, shares have rallied hard in October, hitting a new all-time high in the process. Look for support from the long-term trend. Take a look below.
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Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Whisper Trader Service.
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