by Tracey RyniecJanuary 12, 2010 | Comments : 0 Recommended this article: (0)
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Cato is a specialty retailer that sells women's fashion apparel and accessories through two brands: Cato and It's Fashion. The company emphasizes the value pricing of its product and sells across a range of customers including junior, missy, plus sizes, as well as girls sizes 7-16.
As of Jan 2, Cato operated 1,270 stores in 31 states which are found predominantly in strip malls anchored by a national discount retailer.
Cato Raised Guidance
On Jan 7, Cato reported sales for the five weeks ending Jan 2 rose 8% to $104.1 million from $96.1 million in the same period a year ago. Same store sales in December jumped 7%.
For the first 11 months of the fiscal year, sales climbed 3% compared to a year ago.
With the better-than-expected jump in sales in December, Cato raised its fourth quarter guidance to the range of 20 cents to 22 cents from its prior guidance of 8 cents to 13 cents. The company made 13 cents in the year ago period.
Full-year estimates were bumped to $1.51 to $1.53 from the prior guidance of $1.38 to $1.43 per share. This would be an increase of 32% to 34% over the prior year.
Zacks Consensus Estimates Rise
Given the company's increase in guidance, it's not surprising that the Zacks Consensus has been rising.
The fourth quarter Zacks Consensus jumped 7 cents to 21 cents per share in the last 7 days. This is right in the middle of the company's forecast range.
For fiscal 2010, the Zacks Consensus climbed 9 cents to $1.53 per share which is at the high end of the company's guidance range.
Analysts are also bullish on 2011, as the Zacks Consensus gained 8.6% to $1.65 from $1.52 per share in the last week.
Cato is scheduled to report fourth quarter results on Mar 18.
Cato is a Zacks #1 Rank (strong buy) stock. It has a forward P/E of 13.95 and a price-to-book ratio of 2.06. The company has a strong average 5-year return on equity (ROE) of 15.91%. Cato also rewards shareholders with a dividend yielding 3.10%.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service.
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