The Children’s Place Retail Stores, Inc. (PLCE) is opening stores at the same time it is controlling its inventories. PLCE is trading at 13.9x forward earnings.

Company Description

The Children’s Place is a children’s specialty retailer which operates 947 stores and an online store under The Children’s Place brand.

Sales Rise 5% in the Fourth Quarter

On March 10, The Children’s Place reported fiscal 2009 fourth quarter results which met the Zacks Consensus Estimate of $1.03 per share.

This was better than the fourth quarter of 2008 which resulted in EPS of 72 cents. The quarters ran through Jan 30, 2010 and Jan 31, 2009, respectively.

Sales rose 5% to $462.8 million from $441.5 million in the year ago quarter. Same store sales were flat versus a 1% increase in the fourth quarter of 2008.

In the quarter, the company opened 4 stores and closed 7. For the year, it opened 38 stores and closed 8.

2010 Outlook

Like many retailers, The Children’s Place is working to manage its inventories efficiently. It also is seeking e-commerce growth.

For the first quarter, the company expects continued flat same stores sales and earnings per share between 85 and 90 cents.

For fiscal 2010, it is forecasting earnings per share of $2.90 and $3.10 with low single digit comparable retail sales.

Zacks Consensus Estimates Rise

Given the company’s guidance, analysts moved to raise estimates to be in line with the forecast. The first quarter Zacks Consensus rose a penny to 88 cents.

The 2010 Zacks Consensus gained 5 cents to $3.05 in the last week, which is at the higher end of the company’s guidance range.

Analysts expect 2010 earnings per share growth of 15.6%.

Value Fundamentals

The Children’s Place is a Zacks #1 Rank (strong buy) stock. It has an excellent five year average return on equity (ROE) of 13.2%. The company also has a price-to-book ratio of just 1.98, well within the value range of under 3.

Tracey Ryniec is the Value Stock Strategist for She is also the Editor in charge of the market-beating Zacks Value Trader service.

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