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Jo-Ann Stores, Inc. (JAS) recently raised fiscal 2011 earnings per share guidance for the second time this year after better than expected second quarter results.

Jo-Ann Stores has seen strong sales growth as consumers have tended to stay home and have engaged in projects around the house.

The company is a fabric and craft retailer with stores in 48 states. It sells craft projects, fabrics, frames, paper crafting material and home accents.

Jo-Ann Stores Swung to a Profit in the Second Quarter

On Aug 25, Jo-Ann Stores reported its fiscal second quarter 2011 results which crushed the Zacks Consensus by 900%. Analysts were only expecting 2 cents but Jo-Ann came in with 20 cents per share.

It was the first time in five years the company generated positive results for the second quarter, which is usually a weak period. It lost 13 cents in the year ago quarter.

Net sales jumped 4.7% to $439.3 million from $419.4 million as same store sales rose 4.4%. Last year, same store sales rose just 1.8%. All segments saw sales growth in the quarter with Internet sales on joann.com seeing the biggest increase, jumping 16% to $8.7 million.

Cash is King

The company's cash position is solid. It had a cash balance of $126.1 million at the end of the second quarter, an increase of $45.9 million from the year ago quarter. It also got rid of its outstanding debt, which had totaled $50.5 million at the end of the second quarter last year.

The company's cash position gives it a lot of operating power.

Given the improving market conditions it expects to open even more stores in fiscal 2012 than it previously anticipated. While it will open 30 stores in fiscal 2011, it expects to open 50 in fiscal 2012.

Full Year Guidance Raised

For the second time this year, Jo-Ann Stores raised its fiscal 2011 guidance. Same store sales are expected to be stronger than expected, in the range of 3% to 4%, up from the previous range of 2.5% to 3.5%.

Earnings per share are now forecast in the range of $3.20 to $3.35, up from the previous guidance of $2.95 to $3.10.

As expected with the big beat, the fiscal 2011 Zacks Consensus has jumped by 22 cents to $3.44 per share which is higher than the company's guidance range. All 6 estimates moved higher.

This is earnings growth of 38.8% compared to fiscal 2010.

Value Fundamentals

Jo-Ann Stores still has attractive value characteristics.

When I last reviewed it in June, it was trading at 13.7x forward estimates and is now cheaper, at 12.4x. This is a value as compared to the S&P 500 which is trading just over 13x forward estimates.

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

Read the June 22, 2010 article.

Update to Previous Value Zacks Rank Buy Stocks

Diodes Inc. (DIOD) has been riding the tech revival to record revenue in 2010. DIOD is also a rare company that has both value but also a high growth rate, with a PEG ratio of just 0.5. Read the full article.

Sotheby's (BID) had a hot first half of the year as the rich returned to the art world. Yet the company still has attractive valuations with a PEG ratio of just 0.7. Read the full article.

Sirona Dental Inc. (SIRO) is one of those rare companies that has both value and growth characteristics as its PEG ratio stands at just 0.8. Read the full article.

SKECHERS USA, Inc. (SKX) has seen its stock slide in the last 2 months making it an extremely attractive value stock at just 7x forward estimates. Read the full article.

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. You can follow her at twitter.com/traceyryniec.

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