True Religion Apparel, Inc.

Source: http://www.zacks.com/commentary/8285/True+Religion+Apparel%2C+Inc.
Posted on Monday, August 11th, 2008 | In Market Commentary, Stocks to Watch

Contributed by: Zacks Market Commentaries (http://www.zacks.com/) -

True Religion Apparel, Inc (TRLG) recently announced a record-breaking quarter and is expanding faster than anticipated. The company’s year-over-year earnings have incresed 86% and have a five-year projected growth rate of 20%.

Company Description

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True Religion Apparel, Inc designs, manufactures and markets its own product line of premium apparel. The company is best known for its unique jeans for men, women and children. True Religion merchandise can be found in the company’s 34 retail locations, premium department stores and boutiques around the world, or its web site. The company is headquartered in Vernon, California and carries a market cap of approximately $750 million.

A Record-Breaking Quarter

True Religion announced second-quarter results on August 6th, which included net sales of $64.2 million, a 78.9% year-over-year increase and company record. All three segments of the company reported more than 50% year-over-year increase in sales, including the Consumer Direct segment, which rose by 170.5%.

The record-level sales translated to earnings per share of 39 cents, 18% higher than the consensus estimate and 86% higher than the second quarter of 2007. The company has met or beat earnings expectations in each of the last four quarters, with an average surprise of 8.9%

Raising Guidance

True Religion also raised full-year guidance for the second time this year. The company is projecting 2008 EPS to be between $1.61 and $1.65, up from between $1.52 and $1.56. The forecast reflects a 42% increase from the $1.16 reported for 2007.

Location, Location, Location

On August 4th True Religion opened its newest location in New York City’s Union Square. The newest location is the 16th new store opened this year and brings the total store count to 34. The company expects to have 39 stores by the end of 2008, up from the previous target of 35.

Favorable Industry Comparisons

True Religion has a Return on Equity of 37.0%, which easily trumps the industry average of 12.7%. The Net Profit Margin of 15.6% is more than twice the average. The Zacks #1 Rated stock has an estimated 20% growth rate for the next five years.

The Chart

Shares of True Religion had been trading sideways until recently breaking through a level of resistance at $28 per share and set a new 52-week high. Take a look at the chart below.

“TRLG” Free Stock Analysis: Buy? Sell? Hold?
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