On Aug 24, 2013, Zacks Investment Research upgraded Citi Trends, Inc. (CTRN) to a Zacks Rank #1 (Strong Buy). Shares of this retailer of apparel, accessories, and home decor products have amassed an impressive year-to-date return of roughly 25.4%.
Why the Upgrade?
Citi Trends has been witnessing rising earnings estimates on the back of better-than-expected second-quarter fiscal 2013 results reported on Aug 21. The company’s strategic initiatives such as better utilization of floor area, improvising merchandise margins and efficient inventory management have helped it to make a significant turnaround.
The company’s loss narrowed to 37 cents per share from a loss of 54 cents reported in the year-ago quarter. Moreover, it fared better than the Zacks Consensus Estimate of a loss of 43 cents per share.
Including the quarter under review, in the past 4 quarters the company has outperformed the Zacks Consensus Estimate by an average of 29.8%. Additionally, the company’s long-term estimated EPS growth rate is 11.7%.
Citi Trends reported sales of $137.8 million, marking an increase of 4.2% from the prior-year quarter, primarily driven by improved comparable-store sales performance. The sales also came ahead of the Zacks Consensus Estimate of $137 million. Comparable-store sales in the quarter were up 1.7%.
Looking at fiscal 2013, the company expects to continue posting positive comparable store sales and improved gross margin with lower levels of inventory.
Following impressive results, we are witnessing a rise in the Zacks Consensus Estimate, as analysts become more constructive on the stock’s future performance. The Zacks Consensus Estimate for fiscal 2013 improved to a break even from a loss of 4 cents and for fiscal 2014 it jumped by a penny to 32 cents a share, over the past 7 days.
Other Stocks to Consider
Apart from Citi Trends, there are other stocks with a favorable Zacks Rank, which are capable of continuing with their upbeat performances. These include Hanesbrands Inc. (HBI), Michael Kors Holdings Ltd (KORS) and hhgregg, Inc. (HGG), all of which carry a Zacks Rank #1 (Strong Buy).
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