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Bull of the Day: Express (EXPR)

Madeleine Johnson

Headquartered in Columbus, OH, Express Inc. (EXPR) is a specialty men’s and women’s retailer that’s found predominately in malls and shopping centers in the U.S. The company’s core customer is in their 20s and 30s, and offers work, casual, and going-out apparel.

Investors Upbeat After Q3 Earnings

Back in December, Express reported third quarter earnings that were better-than-expected. Both earnings and revenue topped the Zacks Consensus Estimate. While same-store sales dropped 5%, that figure beat analysts’ estimates of a decline of 6.1%.

Third quarter performance in nearly all categories was a sequential improvement over the last two quarters, and the company’s commitment to improving operating margins and near-term profits were all a good sign for investors going forward.

Why is EXPR Surging?

Express, Inc. Price and Consensus

 

Shares of Express are up nearly 100% in the last six months, helped by increasing optimism about its long-term profitability strategy. Comparatively, the S&P 500 has returned about 8.5%. Earnings estimates have been rising too, and Express is a Zacks Rank #1 (Strong Buy) pick right now.

For the current fiscal year, three analysts have revised their bottom line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up 12 cents from -$0.24 to -$0.12. 2020 looks pretty strong too, with earnings expected to see positive double-digit year-over-year growth.

Last week, Express announced a new profitability plan; management pointed to $80 million in annualized cost-reduction opportunities spread out over the next three years, and identified about 100 stores it will close by 2022.

“Today we are unveiling our new corporate strategy, called The EXPRESSway Forward, and we are focused on profitable growth. My expectation is that we will return to a mid-single-digit operating margin through a combination of low-single-digit comp sales growth, margin expansion and cost reductions,” said CEO Tim Baxter.

Management also narrowed its EPS guidance for the fourth quarter, and now expects earnings between $0.17 and $0.19; the retailer is also looking at its third consecutive quarter of sequential comps improvement in Q4.

If you’re an investor searching for a broader retail stock to add to your portfolio, make sure to keep EXPR on your shortlist.

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