Caris & Co - Dorothy Lakner (917) 464-1564...

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Unformatted text preview: Dorothy Lakner (917) 464-1564 dlakner@cariscompany.com Caris & Company 500 Fifth Ave. Suite 1640 New York, NY 10110 FINRA SIPC For full disclosure, please see end of report 1 C o n s u m e r : S p e c i a l t y R e t a i l R a i s i n g P r i c e T a r g e t True Religion (TRLG: $33.11) Rating 1*/Buy Monday, April 26, 2010 Price Target: old $31; new $40 MARKET DATA 52 Week Range ADT - 3 month Market Cap (Bill) Shares Out Float EARNINGS DATA Earnings Per Share (FD Operating) FY-Dec FY08A FY09A FY10E 1Q $0.29 $0.32 $0.33 2Q $0.39 $0.45 $0.44 3Q $0.64 $0.58 $0.60 4Q $0.53 $0.59 $0.75 FY * $1.83 $1.92 $2.11 EV/EBITDA 10.0x 8.6x 7.7x P/E 18.1x 17.2x 15.7x FINANCIAL DATA FY FY08A FY09A FY10E Sales $270 $311 $361 EBITDA $72 $84 $94 EBITDA % 26.7% 27.0% 26.1% EBIT% 25.5% 25.0% 23.3% ROA 31.3% 23.7% 21.6% ROE 37.4% 27.8% 24.8% Debt/Capital 0.0% 0.0% 0.0% BV/Share $5.91 $8.06 $9.06 BALANCE SHEET 4Q09A Cash & Equivalents $106 Accounts Receivable $27 Inventory $35 Current Assets $188 PPE $40 Goodwill $0 Total Assets $230 Current Liabilities $21 Total Debt $0 Total Liabilities $32 Shareholders Equity $198 Financial data in millions unless otherwise stated 25.0 23.2 $15.20-$33.20 507,844 $0.83 TRLGs Got Good Jeans; Time for A Retail Multiple; Reiterate 1*/Buy; PT $40 from $31 Summary and Recommendation We view TRLG as a small cap growth story with long legs, particularly as the economy improves, TRLGs domestic wholesale business regains steam and its higher margin consumer direct and international businesses continue to build. While TRLG shares have risen from ~$19 on 2/17 to $33 on 4/22, we believe there is further upside to the stock price given the companys growth profile and its evolution into a retail story. TRLG has the most square footage growth potential of any company in our universe, and more than most in retailing, and we believe it is benefiting from the return to shopping by affluent consumers. Due to its innovative product and strong reputation for fit, it has become one of the strongest of the premium denim brands. Now using our 2011 estimate of $2.53, our price target moves to $40 from $31 based on a multiple of 16X, about in line with its 2-year high, but below its 5-year peak of ~20X. Risks to our PT include fashion risk and a deterioration in consumer spending. Key Points High-End Retail Revival Should Benefit TRLG. Recently reported March sales were broadly better than expected as were 3Q results reported this week by COH, providing yet more data points, in addition to our own mall visits, that indicate to us more affluent consumers are back in the malls to buy new spring apparel. We believe this should also be evident in TRLGs 1Q10 (ended March) when it reports on 5/4....
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This note was uploaded on 02/05/2012 for the course FINANCE 101 taught by Professor George during the Spring '11 term at University of Phoenix.

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Caris & Co - Dorothy Lakner (917) 464-1564...

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