"If you've visited a mall – or if you've ever bought clothing for toddlers – you might already be familiar with our latest Undiscovered Gem: Children's Place Retail Stores (NASDAQ: PLCE)," says Elizabeth Harrow.
In Schaeffer's Research, the technical and contrarian advisor explains, "The stock is on the ascent, but Wall Street isn't taking much notice."
"The company was founded in 1969, and is based out of Seacaucus, New Jersey. The retailing chain boasts a market cap of just under $1 billion. It is is a member of the S&P SmallCap 600 Index, as well as the S&P SuperComp 1500, which lends the shares a bit of Street cred.
"The firm recently pleasantly surprised investors with its same-store sales figures. During May, sales at stores open for at least 1 year rose by 10%, compared to analysts' expectations for a gain of 4.3%. Total sales for the month galloped 19% higher for the 4-week period ended May 31.
Children's Place Retail Stores, Inc. (Nasdaq: PLCE) has been in the news recently because it hasn't been able to maximize the value of the licensing agreement it made with The Walt Disney Company (NYSE: DIS) for its Disney Store chain a few years ago. In fact, it looks like Disney will be taking a lot of the stores back (I don't think Disney should do this, though). Well, Children's Place got some more bad news Monday in the form of an earnings cut from an analyst. John Zolidis, of Buckingham Research Group, believes Children's Place will achieve $0.40 per share for Q1, a number that is $0.09 lower than his previous earnings expectation. For the year, he thinks the retailer can do $1.44 per share; his previous estimate was $1.55 per share.
Of course, an analyst is not doing his job if he doesn't send something of a mixed message. He's cutting his expectations for earnings while at the same time saying that the valuation might be attractive at the moment for Children's Place's stock. Well, I sort of understand what he is saying, but let me say this: I don't like Children's Place right now and won't be buying shares, good valuation or not. This is one of those stocks and companies that just doesn't inspire confidence; the retailer plays in a tough niche, the stock is well off its highs, it couldn't properly grow Disney's retail operations, and, perhaps most importantly, there simply might be better ideas out there. If one wants to play retail, why not a Wal-Mart Stores, Inc. (NYSE: WMT) or a Target Corporation (NYSE: TGT)?
Nope, I'm not interested in Children's Place. With this earnings cut, and with stronger retailers up for consideration, I think investors might do better buying something else. Yes, the stock and/or company will probably rebound, but I'm just not in the mood to speculate with this brand.
Disclosure: I own shares in Disney; positions can change at any time.
Despite higher costs, ConAgra Foods Inc. (NYSE: CAG) fiscal third-quarter net income climbed 60% to $309.1 million, or 63 cents a share. Sales for the quarter increased 21% to $3.53 billion.
Hoop Holdings, a unit of Children's Place Retail Stores Inc. (NASDAQ: PLCE) and the operator of Disney Store North America, said late on Wednesday that it filed for Chapter 11. Children's Place isn't part of the Chapter 11 petition, but is in talks to sell a substantial part of the Disney Store business to Walt Disney Co. (NYSE: DIS) in order to concentrate on its core namesake brand.
Rambus (NASDAQ: RMBS) shares are advancing another 4.4% in premarket trading after closing up over 38% yesterday following a court decision finding it wasn't guilty of fraud or violating antitrust laws in dealing with an industry group that set technology standards for dynamic random access memory, or DRAM, chips in the 1990s.
General Electric Co. (NYSE: GE) was raised to Buy from Neutral' at Merrill Lynch, due to its defensive positioning in the current economic climate. GE shares are up 1.7% in premarket trading following the upgrade.
Visa Inc. (NYSE: V) shares soared over 28% in their stock market debut Wednesday. Already priced above expectations at $44 per share in the biggest IPO in U.S. history that raised nearly $18 billion, Visa shares closed at $56.50. Many assume that given the successful MasterCard (NYSE: MA) IPO and given Visa's leading position, the shares are worth a shot, especially in today's market conditions.
As Apple (NASDAQ: AAPL) enhances the the security of the iPhone and adds more enterprise-friendly version of firmware by June 2008, IT advisory and consulting firm Gartner Inc, originally concerned about about some security issues, may then raise its recommendation to "appliance-level" support status for the device, permitting it to be used for PIM, e-mail, telephony and browsing applications and more.
The saga of former Children's Place (NASDAQ: PLCE) CEO Ezra Dabah's battle to acquire the company just keeps getting weirder.
Dabah, who "resigned at the request of the board of directors" (file under: How many words can we use to say "fired") back in September over violations of the company's code of ethics, said in an in amended 13-D filing yesterday:
On February 19, 2008, the Company announced that its 2008 annual meeting of stockholders is scheduled to take place on June 27, 2008. An annual meeting of stockholders has not been held by the Company since June 22, 2006, a period of over 18 months. The Reporting Persons believe that there is no reason to delay the annual meeting for another four months. Accordingly, on February 21, 2008, Ezra Dabah filed a complaint (the "Complaint") in the Court of Chancery for the State of Delaware (the "Chancery Court") requesting that the Chancery Court order the Company to hold the annual meeting within 45 days from the filing of the Complaint.
After reports surfaced that The Children's Place (NASDAQ: PLCE) explores a sale earlier this month, the stock surged. Now the company has made it official, hiring Lehman Brothers to explore strategic alternatives, including operational improvements, a recapitalization, or other transactions.
Here's where it gets dicey: The Children's Place has been a train-wreck of late. The stock price has tanked over the past year, the company's auditor has announced it will not stand for re-election because it can't rely on information provided by former CEO Ezrah Dabah, and several shareholder class-action lawsuits are pending against the company.
The rumor is that Dabah, who owns 18% and serves on the board and was fired from the CEO job for failing to comply with company rules regarding insider trading, may be interested in purchasing all or part of the company.
In other words, Mr. Dabah, a big part of the reason the stock is down so much, could stand to benefit from buying it at a fire-sale price. It's a little bit like an employee who set fire to his place of work and then begged the mercy of the court because he was out of a job ... or something.
If Dabah does emerge as a bidder, expect to hear a lot more about Children's Place in the months to come. It could well become the corporate governance freak show of the year.
Children's Place (NASDAQ: PLCE) operates 899 The Children Place stores and 328 Disney Stores. PLCE is recently up $1.58 to $24.23 on renewed takeover speculation. Ex-chief executive, Ezra Dabah, a owner of 17.9% of PLCE, has said he's considering buying the company and engaged Bear Stearns (NYSE: BSC) as his financial adviser. PLCE November option implied volatility of 76 is above its 26-week average of 45 according to Track Data, suggesting traders are positioning themselves for a high share price.
RadioShack (NYSE: RSH), a company with a presence of through approximately 6,000 stores, is recently up .33 cents to $19.78 on renewed & unconfirmed buyout speculation. RSH is expected to report EPS on 10/29. RSH call option volume of 5,206 contracts compares to put volume of 514 contracts. RSH November option implied volatility of 70 is above its 26-week average of 43 according to Track Data, suggesting larger price risks.
Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
Shares of Children's Place (NASDAQ: PLCE) were up more than 5% on Friday after the children's clothier and Disney Store owner announced that it was putting itself up for sale. The shares closed at $23.92, well off the 52-week high of $71.81. The company has been mired in scandal and recently CEO Ezra Dabah recently resigned after an investigation found that he had failed to comply with company rules regarding insider trading and reporting. Dabah remains on the board and own 18% of the company.
Here's where it gets interesting. According to The Wall Street Journal, "Mr. Dabah has told acquaintances that he wants to start his own private-equity firm and may be interested in buying Children's Place and the Disney Store chain it operates. Mr. Dabah had been CEO of Children's Place since 1991."
Children's Place hasn't filed a 10-Q in more than a year, has several shareholder class-action lawsuits pending against it, and its auditor, Deloitte & Touche, reported that it would not stand for re-election because it can't rely on information provided by Mr. Dabah and the company.
In other words, a big part of the blame for the company's troubles -- and resulting stock price -- could probably be placed on the shoulders of Mr. Dabah. With the stock so far off its highs, he may stand to benefit from his poor management if he ends up acquiring all or part of the company.
Cisco Systems Inc (NASDAQ: CSCO) and Haier Group, China's largest manufacturer of appliances, have agreed to work together on home networking in China and international markets, according to the Wall Street Journal.
India's Wipro Limited (NYSE: WIT) has received a five year, $130M contract from British utility Thames Water to provide integrated IT services, reported the Economic Times.
MOST NOTEWORTHY: American Home Mortgage (AHM), Biogen Idec (BIIB), Bebe Stores (BEBE), Ingersoll-Rand (IR) and SK Telecom (SKM) were today's more noteworthy downgrades:
RBC Capital cut American Home Mortgage (NYSE: AHM) to Sector Perform from Outperform citing the deterioration in the global debt markets for the downgrade.
Morgan Stanley downgraded shares of Biogen Idec (NASDAQ: BIIB) to Underweight from Equal Weight citing risk to Rituxan growth.
Merriman downgraded Bebe Stores (NASDAQ: BEBE) to Neutral from Buy as they believe new fall merchandise is not performing well enough to improve sales trends.
Robert W. Baird downgraded shares of Ingersoll-Rand (NYSE: IR) to Neutral from Outperform citing higher risk premium due to the IRS challenge and tighter credit markets that could impact the Bobcat divestiture.
OTHER DOWNGRADES:
Children's Place (NASDAQ: PLCE) was cut to Neutral from Positive at Susquehanna.
Thomas Weisel downgraded LoopNet (NASDAQ: LOOP) to Market Weight from Overweight.
ThinkEquity cut Kyphon (NASDAQ: KYPH) to Accumulate from Buy.
Needham downgraded QLogic (NASDAQ: QLGC) to Hold from Buy.
JMP Securities downgraded ValueClick (NASDAQ: VCLK) to Market Perform from Outperform.
Apple Inc. (NASDAQ:AAPL) and Cisco Systems Inc. (NASDAQ:CSCO) agreed on one thing regarding the iPhone trademark issue and that is to extend the time Apple has to respond to Cisco's lawsuit on the matter. Well, I guess it's a start.
Children's Place Retail Stores Inc. (NASDAQ:PLCE) the Walt Disney Co. (NYSE:DIS)started talks about the long-term license agreement to operate the Disney Store retail chain in North America.
Something that came out of Google Inc. (NASDAQ:GOOG) earnings report yesterday and that should concern eBay Inc. (NASDAQ:EBAY) has to do with Google Checkout, Google's online payment system that could rival eBay's PayPal. Apparently, Google spent 1% of its revenue on Checkout and said that it has been adopted by 20% of the top 500 retailers.
Microsoft Corp.'s (NASDAQ:MSFT) senior executive, Bryan Lee, who oversaw the launch of its Zune digital music player plans to leave the company.
Starbucks Corp. (NASDAQ:SBUX) reported quarterly results after yesterday's close. The results were bang on with an 18% profit rise. SBUX shares are up 0.9% in pre-market trading.
According to the Wall Street Journal, Wal-Mart Stores Inc. (NYSE:WMT) saved itself hundreds of millions of dollars in taxes by paying rent to itself.
Exxon Mobil Corp. (NYSE:XOM), the world's largest publicly traded company, just reported the largest annual profit by a U.S. company - $39.5 billion. Earnings for the last quarter of 2006 declined 4%. Net income slipped to $10.25 billion, or $1.76 a share. Excluding one-time items, Exxon Mobil earned $1.69 a share. The average forecast of analysts polled by Reuters Estimates was $1.51 a share.
Thomas Weisel initiated a bunch of retail stocks: Abercrombie & Fitch Co. (NYSE:ANF) Overweight, Coach Inc. (NYSE:COH) at Overweight and Kohl's Corp. (NYSE:KSS) at Market Weight to name a few. Meanwhile, Goldman Sachs decided to take the contrarian approach and lowered Dell Inc.'s (NASDAQ:DELL) target from $29 to $28. Goldman, however, upped the Google Inc.'s (NASDAQ:GOOG) target price from $595 to $620.
The saga of former 
After 
Children's Place
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