Dress Barn, Inc.

Dress Barn, Inc. (DBRN) recently rebounded from a key trend line after reporting better than expected Q3 results in late May that included the company's fourth earnings surprise in the last four quarters. The longer term view looks good too, with the next-year estimate projecting 21% earnings growth.

Company Description

Dress Barn, Inc. operates a chain of woman's apparel specialty stores primarily under the names Dress Barn, Dress Barn Woman and Maurices. The company was founded in 1962, operates over 1,500 stores and has a market cap of $2.18 billion.

With consumers feeling better about spending on discretionary items like clothes over the last year as the economy recovers, Dress Barns's business has been on the upswing. Our last look at the company came on May 26 with Q3 results that came in ahead of expectations.

Third-Quarter Results

Revenue for the period was up 77% $665.5 million. While a large portion of that gain came on Dress Barn's inclusion of Justice sales in its results, its same-store sales were still up an awesome 14%/.

Earnings also came in strong at 60 cents, one penny ahead of the Zacks Consensus Estimate.The company now has an average earnings surprise of 18% over the last four quarters.

Dress Barn also saw its operating margin increase to 11.5% of sales from 10.7% last year.

Strong Balance Sheet

Dress Barn emerged from the quarter with its strong balance sheet in tact, with cash and equivalents totaling $265 million and just $26 million in long-term debt.

Estimates Advance

The analysts clearly liked what they saw, with estimates taking a nice jump forward on the quarter. The current year added 23 cents to $1.83 while the next year added 22 cents to $2.22, a bullish 21% growth projection.

Valuation

With a forward P/E of 14.5X, shares of DBRN trade at a discount to its peer's 16X. Its P/B multiple of 2.10X is above its peer average of 1.80X but still well into value territory.

2-Year Chart

DBRN hit a new multi-year high in late April before pulling back a bit with the market. More recently, shares have rebounded from a key trend line that has been in play since March of last year, take a look below.

Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.

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