Pier 1 Imports, Inc. - Momentum

Pier 1 Imports, Inc. (PIR) just jumped into a new multi-year high after reporting strong Q4 results that came in ahead of expectations. With an average earnings surprise of 160% over the last four quarters and a bullish growth projection, this Zacks #1 stock is a solid momentum player.

Company Description

Pier 1 Imports, Inc. operates as a retailer of furniture and home goods in the United States, Canada and Mexico. The company was founded in 1970 and has a market cap of $1.43 billion.

Pier 1 looked dead in the water only two years ago as its share price plummeted in the financial crisis amongst concern about bankruptcy. But PIR hung tough and proceeded to rebound as the company’s business began to accelerate out of the recession. That was last on display in early April with Q4 results that came in ahead of expectations.

Fourth-Quarter Results

Revenue for the period was up 7.7% from last year to $427 million. Earnings also came in strong at 48 cents, 2% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 160% over the last four quarters.

Pier 1 scored big in a closely watched retail metric, with same-store sales up 8.9% from last year. The company also saw merchandise margins climb to 58.4% of sales from 55.8% last year. Gross profit jumped to 42/8% of sales from 38.9%.

Financial Profile

With strong earnings momentum in hand, PIR’s balance sheet is on the upswing, with cash and short-term investments up $96 million from last year to $301 million while total debt fell $25 million to $9.5 million.

Estimates

We saw some decent movement in estimates off the good quarter, with the current year adding 3 cents to 77 cents while the next-year estimate gained 4 cents to 86 cents, a solid 11% growth projection.

Valuation

But in spite of the gains, PIR still looks reasonably valued, trading with a forward P/E of 15X, a nice discount to its peer average of 19X.

12-Month Chart

On the chart, PIR jumped higher on the good quarter, hitting a number of new 52-week highs since then. Although shares could be a bit overextended in the short run, look for support from the medium-term trend line on any weakness, Take a look below.