Is Francesca’s Holdings Corp (FRAN) a Retail Succss or Just a Fad?

Solid Holiday Sales

The company reported solid holiday numbers with sales expected to now rise 37% over last year. Francesca’s expects comp sales to increase an impressive 7 to 8%. Analysts now expect earnings to soar 50% to $0.30 after originally expecting a 40% jump to $0.28.

In general, analysts forecast a strong 5-year growth rate of over 30%. The stock currently trades at nearly 22x forward earnings. It appears attractive at these levels and currently trades roughly $9 below the all-time high around $37. Even after forecasting better than expected holiday results, the stock has had a limited rebound from the lows.

Conclusion

Francesca’s appears to be a cheap stock in a competitive sector. The company has the potential for strong store expansion over the next 5-7 years. Investors need to be alert for the store expansion cannibalizing existing stores. Until then, the stock provides for a cheap entry point into a leader in the trendy women’s clothing sector.

The article Is Francesca’s (NASDAQ:FRAN) a Retail Succss or Just a Fad? originally appeared on Fool.com and is written by Mark Holder.

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