by James Brumley | December 2, 2013 6:05 am
Black Friday 2013 came and went with the usual fanfare, officially marking the beginning of the busy holiday shopping season.
But even with Black Friday 2013 in the books, there is still a lot of shopping left for folks to do … and so many investor are looking to cash in.
Usually, the world’s biggest retailers are the stocks to watch and buy for such investors. But sometimes, the real stocks to watch are more obscure names like American Eagle Outfitters (AEO), Francesca’s Holdings (FRAN), or Express (EXPR).
In fact, AEO stock, FRAN stock, and EXPR stock are especially hot stocks to watch this week, as all three companies will be reporting last quarter’s earnings within the next few days.
Should your Black Friday shopping list have included these names … and is it too late to step into a position in EXPR stock, AEO stock or FRAN stock headed into the busiest retailing period of the year? After all, Black Friday shopping is only a piece of the total retailing pie.
The answer for these three stocks to watch may largely depend on third-quarter numbers, and the outlook that accompanies those results. Here’s what you need to know now that Black Friday 2013 is over and earnings news is on the way for these three names.
Express (EXPR) will be the first of these smaller retailers to post last quarter’s results. Remember: Black Friday 2013 won’t show up until Q4 numbers, while all three stocks to watch are slated to release Q3 numbers. Express in particular will be one of the top stocks to watch on Wednesday, Dec. 4, as it releases Q3 numbers that morning.
The current expectation is for a profit of 25 cents per share of EXPR stock on sales of $499.7 million, vs. year-ago comparables of 20 cents and $468.5 million. That’s a projected 25% improvement in Express earnings and a 6.6% increase in revenue, extending a pretty reliable three-year growth streak.
For what it’s worth, Goldman Sachs currently rates EXPR stock as a buy, BMO considers the company attractive heading into its earnings report, and Mizuho recently initiated analytical coverage on Express, deeming it a buy.
The next company releasing third-quarter earnings the week after Black Friday 2013 is Francesca’s Holdings (FRAN). FRAN will be one of the top stocks to watch on Dec.5, 2013, when it releases its results before the market opens.
Analysts believe a profit of 20 cents per share is in the cards for FRAN stock, down from Q3-2012’s income of 24 cents per share. Sales are projected to rise, nonetheless, from $72.0 million last year to $79.2 million.
Don’t be fooled into thinking this is just a low-ball target that Francesca’s will easily top. The retailer only met estimates in the first quarter of this year, and actually missed estimates in Q2. That makes FRAN one of the most important stocks to watch, because there could be a real problem here. And if there is, FRAN is going to need more than a strong Black Friday 2013 to snap out of it.
On top of that, as news-worthy as the upcoming earnings may be, there’s actually a bigger threat to the value of FRAN stock right now: a brewing class action lawsuit. The complaint? The lawyers putting together the suit will argue that Francesca’s didn’t adequately warn investors that the past couple of quarters would be disappointing.
While poor corporate results rarely lead to a successful lawsuit, they can be distracting and could be a drag on FRAN stock. That’s why, Black Friday 2013 aside, this boutique chain is definitely top on the list of stocks to watch in coming months.
American Eagle Outfitters (AEO) is the final of our retail stocks to watch, and will release its Q3 earnings figures on the morning of Friday, Dec. 6 — exactly a week after Black Friday 2013.
The pros say the company’s going to book a profit of 19 cents per share, vs. last year’s comp of 41 cents. Driving the sizeable plunge in income for AEO stock is a projected 6.7% decline in its third-quarter revenue.
That’s quite a reversal of fortune, as American Eagle was one of the top stocks to watch last year because it had been doing pretty well. In 2013, though, AEO stock has struggled.
Is there any possibility Black Friday 2013 could have jolted American Eagle Outfitters back to its formerly great form? Maybe, but Black Friday shopping may not be the focal point with the upcoming earnings announcements.
Instead, investors that count American Eagle as on of their stocks to watch need to listen closely to Friday’s news and conference call for detail that might impact the price of AEO stock. This is especially true because American Eagle Outfitters is still in the midst of a turnaround story. Current and prospective AEO stock investors can’t expect perfection yet, but they should hear plausible updates on, and plausible plans for, the turnaround process.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
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