Investors must take prudent decisions when it comes to picking stocks, as any minor error may gravely hurt their portfolio’s returns. Citi Trends, Inc. (CTRN - Free Report) is one such stock which should not be part of your investment basket for the time being. The stock carries a Zacks Rank #5 (Strong Sell) and has plunged nearly 33% in the past one year. The Zacks Consensus Estimate too has been going downhill, clearly indicating that analysts covering the stock are not convinced about its future performance.
What’s Hurting the Stock?
Citi Trends’ business is heavily dependent on the tastes and preferences of consumers that keep changing with time. Hence, the failure to identify consumer needs and act accordingly may reduce the demand for its products, and weigh on financial results too. Further, the company’s dependence on small-sized suppliers with less capital, who are vulnerable to the general macroeconomic headwinds, poses a concern.
Additionally, the business of this value-priced retailer of urban fashion apparel and accessories is seasonal in nature, and typically generates stronger sales during the first and fourth quarters, which are characterized by the spring and holiday seasons. Consequently, the company is exposed to significant risks if the seasons fail to deliver the expected operating performance.
Citi Trends posted dismal results for the first quarter of fiscal 2016, as both the top and bottom lines lagged estimates and declined year over year. Also, this marked the company’s third straight quarter of both sales and earnings miss, further highlighting its unimpressive history. Moreover, management expects its average units sold to remain pressurized in fiscal 2016, and be down in the low to mid-single digits, thus posing a concern.
In the trailing four quarters, the company underperformed the Zacks Consensus Estimate by an average of 5.7%. Further, the Zacks Consensus Estimate of 92 cents and $1.29 for fiscal 2016 and fiscal 2017 has decreased 27 cents and 2 cents, respectively, over the past 60 days.
Apart from this, Citi Trends operates in a highly fragmented specialty retail sector and faces intense competition from larger off-price rivals. To retain its existing market share, the company may have to reduce its sales prices, which may affect its margins.
Stocks that Warrant a Look
Some better-ranked stocks in the same industry include Christopher & Banks Corporation , The Children's Place, Inc.(PLCE - Free Report) , both sporting a Zacks Rank #1 (Strong Buy) and American Eagle Outfitters, Inc.(AEO - Free Report) , carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Investors must take prudent decisions when it comes to picking stocks, as any minor error may gravely hurt their portfolio’s returns. Citi Trends, Inc. (CTRN - Free Report) is one such stock which should not be part of your investment basket for the time being. The stock carries a Zacks Rank #5 (Strong Sell) and has plunged nearly 33% in the past one year. The Zacks Consensus Estimate too has been going downhill, clearly indicating that analysts covering the stock are not convinced about its future performance.
What’s Hurting the Stock?
Citi Trends’ business is heavily dependent on the tastes and preferences of consumers that keep changing with time. Hence, the failure to identify consumer needs and act accordingly may reduce the demand for its products, and weigh on financial results too. Further, the company’s dependence on small-sized suppliers with less capital, who are vulnerable to the general macroeconomic headwinds, poses a concern.
Additionally, the business of this value-priced retailer of urban fashion apparel and accessories is seasonal in nature, and typically generates stronger sales during the first and fourth quarters, which are characterized by the spring and holiday seasons. Consequently, the company is exposed to significant risks if the seasons fail to deliver the expected operating performance.
Citi Trends posted dismal results for the first quarter of fiscal 2016, as both the top and bottom lines lagged estimates and declined year over year. Also, this marked the company’s third straight quarter of both sales and earnings miss, further highlighting its unimpressive history. Moreover, management expects its average units sold to remain pressurized in fiscal 2016, and be down in the low to mid-single digits, thus posing a concern.
In the trailing four quarters, the company underperformed the Zacks Consensus Estimate by an average of 5.7%. Further, the Zacks Consensus Estimate of 92 cents and $1.29 for fiscal 2016 and fiscal 2017 has decreased 27 cents and 2 cents, respectively, over the past 60 days.
Apart from this, Citi Trends operates in a highly fragmented specialty retail sector and faces intense competition from larger off-price rivals. To retain its existing market share, the company may have to reduce its sales prices, which may affect its margins.
Stocks that Warrant a Look
Some better-ranked stocks in the same industry include Christopher & Banks Corporation , The Children's Place, Inc.(PLCE - Free Report) , both sporting a Zacks Rank #1 (Strong Buy) and American Eagle Outfitters, Inc.(AEO - Free Report) , carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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