Cheap Price Makes Francesca's Holdings (FRAN) a Good Asset
Positive insider activity for 2018, only buys no sales. Insider shares purchased for 2018 were 47,000 shares purchased for $230,950 or an average price of $4.91 per share.
Value institutional ownership all adding shares for the most recent reported quarter ending 09/30/18.
PARADIGM CAPITAL (6.76%) ,VANGUARD (6.15%),Chuck Royce (4.81%), AQR CAPITAL (3.20%), HOTCHKIS (2.25%),Parametric (1.28%)
Relative Valuation: FRAN has the lowest valuation in its industry for price to BV, EV to Sales,BV growth, and best cash conversion that doesn’t reconcile the industry’s weakest stock performance.
Data in the above taken from Guru Focus
Risk and Opportunity
Risk:
The risk is clear with little room for error. Closing impaired stores, 14% YOY decline in their largest merchandise category apparel, troubling quick ratio,growing large short position. A low 10M cash balance with 50M in accrued expense and negative cash flow.
Opportunity:
The current price discounts the operational and financial uncertainty. FRAN is an industry outperforming for historical profits and free cash flow. Its unlikely to disappear because of the soft mall traffic. The 38M credit line, A/R from taxes, year end inventory clearance, store closings and other changes give investors a possible asymmetric payoff.
Long: FRAN
Source: http://shadowstock.blogspot.com/2019/01/cheap-price-makes-francescas-holdings.html
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