Jo-Ann Stores Inc.

As consumers have hunkered down during the recession, one area that has benefited is stores that sell home crafts and sewing products. Jo-Ann Stores, Inc. (JAS) has surprised on the Zacks Consensus 5 quarters in a row, which is impressive as that time period covered the darkest time of the retail recession.

Jo-Ann Stores operates retail stores specializing in crafts, home decorating, and apparel and craft sewing in 48 states.

The company sells craft projects, fabrics, frames, paper crafting material, home accents and seasonal home decor merchandise through 231 large-format and 519 small-format stores.

Another Earnings Surprise in the First Quarter

On May 26, Jo-Ann Stores reported its fiscal 2011 first quarter results and blew by the Zacks Estimate, yet again, this time by 47%. Earnings per share were 66 cents compared to the consensus of 45 cents. EPS was more than double the year ago number.

Sales rose 4.4% to $480.3 million from $460 million in the first quarter of a year ago. Same store sales also gained 4.1% which was much stronger than a year ago, when it gained just 1%.

Both large and small-store formats saw sales increases in the quarter with small-store same store sales jumping 6.9% and large-store formats gaining 1.9%.

The company's Internet site, joann.com, also saw sales gains of 8.4% to $10.3 million compared to the first quarter of fiscal 2010.

Seasonal merchandise and custom framing, which had been laggards through the recession, finally saw a rebound as they delivered positive sales results for the first time in 2 years.

Cash is King

Jo-Ann Stores has been building up its cash hoard. It finished the first quarter with cash of $160.7 million, up $75.7 million in the quarter.

It also had no outstanding debt at the end of the first quarter, which is much better than a year ago when it still had $50.5 million in outstanding debt.

Raised Guidance

Given the much better-than-expected first quarter, it's not surprising that Jo-Ann Stores raised its full year EPS guidance. The new range is expected to be $2.95 to $3.10 up from the previous forecast of $2.75 for $2.90.

Last year Jo-Ann Stores made $2.48 per share.

Analysts also raised estimates to get in-line with the company's guidance but the Zacks Consensus is now higher than the guidance range at $3.20 per share. This would be earnings growth of 29% compared to fiscal 2010.

Is Jo-Ann Stores a Value Stock?

Jo-Ann Stores has a forward P/E of 13.7 which is under the industry average of 15.2 and well within the range of a typical "value" stock.

Its price-to-book ratio of 2.1 is in-line with the industry average and also within the value parameters.

Using price-to-sales, the company is also cheap. Its ratio is just 0.6.

Jo-Ann Stores is a Zacks #1 Rank (strong buy) stock.

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.

Read the full analyst report on JAS