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Bear of the Day: The Container Store (TCS)

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The Container Store Group, Inc. (TCS - Free Report) recently missed earnings for the second quarter in a row. This Zacks Rank #5 (Strong Sell) is still in a turnaround.

The Container Store operates stores across the United States that specialize in storage and organization products.

The Container Store Missed on Fiscal Fourth Quarter

On May 22, The Container Store reported fiscal fourth quarter results which came up shy compared to the Zacks Consensus.

Earnings were $0.18 versus the consensus of $0.24, or a miss of $0.06.

Comparable stores sales, the key metric for retailers, was actually up 2.7% but for the full Fiscal Year 2017, they only rose 0.9%.

Consolidated gross margin was 58.6%, an increase of 100 basis points compared to the year ago quarter.

Analysts Adjust Their Estimates

The company issued full year fiscal 2018 guidance which includes comparable store sales ranging from flat to up just 1%.

Earnings are expected to be in the range of $0.35 to $0.45.

Analysts like to be in the middle of a company's guidance range, so 2 estimates were cut over the last month, pushing the Zacks Consensus down to $0.40 from $0.43. The new consensus of $0.40 is right in the middle of the company's range.

However, that's still an amazing 42.8% increase compared to fiscal 2017 earnings which were just $0.28.

Stock Up Big: Too Hot to Handle?

The Container Store was left for dead by investors.

Since its 2014 IPO, shares are down 79%.

But if you took a chance and bought to star the year, you'd be up 51.2%.



The shares are no longer cheap either. They trade with a forward P/E of 19.

With The Container Store looking pricey, investors might want to take a look at a cheaper specialty retailer, Party City Holdco Inc. (PRTY - Free Report) . It trades with a forward P/E of just 8 and it's a Zacks Rank #3 (Hold).

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