DJIA 8823.30 +127.70 (+1.47%) S&P 500 1162.83 +21.63 (+1.90%) Nasdaq 2012.60 +45.68 (+2.32%) Value Line ndx 868.97 +4.02 (+0.46%) 30-Year Bond 103 12/32 -22/32 5.03% Yield
Leading home electronics retailers Best Buy <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BBY)") else Response.Write("(NYSE: BBY)") end if %> and Circuit City Stores <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CC)") else Response.Write("(NYSE: CC)") end if %> advanced today after Best Buy reported Street-beating fiscal third quarter (ended Nov. 28) earnings and hinted at more good news this month. "Consumer confidence combined with hot technology products and great deals kicked off what should be a strong holiday season at Best Buy," said CEO Richard M. Schulze, whose company hummed ahead $4 1/8 to $53 1/8 on reporting Q3 EPS of $0.52, beating the year-ago $0.29 figure and First Call's $0.50 per share estimate. Schulze credited strong sales of entertainment software and technology products like DVD, DBS, digital cameras and cellular telephones for driving a 106% year-over-year net earnings increase. Circuit City, which was upgraded to "buy" from "outperform" by Salomon Smith Barney yesterday, advanced $3 3/16 to $43 1/2 today.
A bidding war appears to be shaping up for aerospace and industrial products supplier Coltec Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: COT)") else Response.Write("(NYSE: COT)") end if %>, and one of the combatants is crying foul. Coltec zoomed ahead $2 to $18 11/16 today after Crane Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CR)") else Response.Write("(NYSE: CR)") end if %> offered to buy the company for $22.40 per share, a 34.2% premium over the company's closing price yesterday. That's also a premium over the $20.13 per share offer from B.F. Goodrich Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GR)") else Response.Write("(NYSE: GR)") end if %> that Coltec accepted late last month. Smelling a rat, Crane says it is suing both companies alleging, among other things, a breach of a 1995 agreement requiring Coltec to notify Crane of any third-party acquisition interest to surface over the next three years. That pact reportedly expired Oct. 31, and Crane believes Coltec jumped the gun. Shares of Crane fell $1/4 to $27 3/4 today, while B. F. Goodrich advanced slightly $9/16 to $33 9/16, possibly reflecting uncertainty about Coltec's prospects following recent news of production cutbacks at Boeing <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BA)") else Response.Write("(NYSE: BA)") end if %>, Coltec's biggest customer.
QUICK TAKES: Banking giant Citigroup <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: C)") else Response.Write("(NYSE: C)") end if %> deposited gains of $2 11/16 to $48 3/4 after announcing a broad restructuring plan that will carry a $900 million charge, mostly in Q4, but is seen bringing annual pre-tax efficiencies of $975 million starting in 2000... MovieFone Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MOFN)") else Response.Write("(Nasdaq: MOFN)") end if %>, the largest movie listing and ticketing service in the U.S., rang up $1 15/16 to $13 3/4 after announcing expanded agreements with three theater chains spreading the area where its services are available. More in today's Lunchtime News... Data communications equipment company Cisco Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSCO)") else Response.Write("(Nasdaq: CSCO)") end if %> added $3 3/8 to $83 3/4 after it said it will provide asynchronous transfer mode (ATM) equipment to MCI WorldCom <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WCOM)") else Response.Write("(Nasdaq: WCOM)") end if %> and unveiled its Internet Business Solutions Group to help companies use Web technology.
Web portal company Infoseek <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SEEK)") else Response.Write("(Nasdaq: SEEK)") end if %> ran ahead $6 5/16 to $47 1/2 after Merrill Lynch upgraded its near-term rating on the company to "accumulate" from "neutral." The Fool chatted with CEO Harry Motro this summer. Other portals moved as well today, as Lycos <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LCOS)") else Response.Write("(Nasdaq: LCOS)") end if %> locked up $2 9/16 to $55 and Yahoo! <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: YHOO)") else Response.Write("(Nasdaq: YHOO)") end if %> added $6 3/4 to $198... Meanwhile, Web address registrar Network Solutions <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NSOL)") else Response.Write("(Nasdaq: NSOL)") end if %> took on $8 9/16 to $115 9/16 after announcing an agreement with Yahoo! to expand its promotions for domain registration services across Yahoo!'s properties worldwide... Online service provider America Online <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %> mailed in a gain of $3 1/2 to $92 3/4 after it said Latin American media company Cisneros Group will make a $100 million initial investment in a partnership to develop AOL's online service in Latin American markets.
Internet IPO du jour and content aggregator Infospace.com <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INSP)") else Response.Write("(Nasdaq: INSP)") end if %> ran up $5 to $20 in its first day of trading. The company sold 5 million shares at $15 each... Cable systems and set-top boxes provider General Instrument <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GIC)") else Response.Write("(NYSE: GIC)") end if %> jumped $3 11/16 to $34 1/4 on reports that Dutch electronics giant Philips Electronics <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PHG)") else Response.Write("(NYSE: PHG)") end if %> was in talks to either buy the company or form a joint venture... Wireless telecom equipment company Nokia's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NOK.A)") else Response.Write("(NYSE: NOK.A)") end if %> American depositary receipts picked up $5 3/8 to $112 after it announced a $140 million network order from another Finnish company. Prudential Securities upgraded the stock to "accumulate" from "hold" this morning... Database software provider Oracle Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ORCL)") else Response.Write("(Nasdaq: ORCL)") end if %> added $2 7/16 to $39 9/16 after Warburg Dillon Read initiated coverage of the company with a "buy" rating and a $49 per share price target.
Pentium chipmaker Intel <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %> rose $4 3/8 to $115 15/16 after designating five companies, including Manchester Equipment <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MANC)") else Response.Write("(Nasdaq: MANC)") end if %>, as "Authorized Solution Providers," marking them as preferred sources of Intel products and services... Industrial tool and specialty equipment products company Global Industrial Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GIX)") else Response.Write("(NYSE: GIX)") end if %> rose $2 1/4 to $10 5/8 after steel holding company WHX Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WHX)") else Response.Write("(NYSE: WHX)") end if %>, a 9.9% owner of Global Industrial, said it plans to start a $10.50 per share tender offer for the rest of the company, offering a 25% premium over yesterday's closing price... Sun Microsystems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SUNW)") else Response.Write("(Nasdaq: SUNW)") end if %> beamed up $3 7/8 to $80 1/8 after the maker of UNIX workstations and networking software announced a partnership to develop Java technology for consumer electronics with Japan's Matsushita Electric Industrial Co.
Supply-chain management software developer i2 Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ITWO)") else Response.Write("(Nasdaq: ITWO)") end if %> claimed $1 3/16 to $25 after Everen Securities upgraded the company's short-term rating to "outperform" from "market perform"... Magazine publisher Petersen Companies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PTN)") else Response.Write("(NYSE: PTN)") end if %> flipped up $2 3/16 to $33 1/2 after it said British company EMAP plc will launch a tender offer for its shares at $34 each, an 8.6% premium over yesterday's closing price... Chipmaker Analog Devices <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ADI)") else Response.Write("(NYSE: ADI)") end if %> moved up $1 1/4 to $26 3/8 as it unveiled a new Digital Signal Processor for 3Com's <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: COMS)") else Response.Write("(Nasdaq: COMS)") end if %> newest line of modems... Aerospace accessories and components maker Triumph Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TGI)") else Response.Write("(NYSE: TGI)") end if %> flew ahead $2 13/16 to $28 3/16 after it said its Triumph Air Repair division won a one-year contract (with options for eight more) for maintenance on KC-10 tankers from Boeing Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BA)") else Response.Write("(NYSE: BA)") end if %> valued at $7.4 million annually.
Call center automation systems designer InterVoice <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTV)") else Response.Write("(Nasdaq: INTV)") end if %>, an October Daily Double, rang up a gain of $1 5/16 to $31 7/8 after announcing Q3 EPS of $0.36, up from $0.02 for the same period last year and in line with market expectations... Las Vegas-based natural gas provider Southwest Gas Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SWX)") else Response.Write("(NYSE: SWX)") end if %> rose $2 5/16 to $26 1/16 after agreeing to be acquired by fellow gas company ONEOK Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OKE)") else Response.Write("(NYSE: OKE)") end if %> for $28.50 per share, or $1.8 billion, including assumed debt... Cancer drug developer Cytoclonal Pharmaceutics <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CYPH)") else Response.Write("(Nasdaq: CYPH)") end if %> rose $1 5/16 to $7 after it said it won an exclusive license for rights to a fungus that produces telomerase, known as the "immortality enzyme" for its ability to protect chromosomes from damage.
Healthcare information and market research company Pharmaceutical Marketing Services <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PMRX)") else Response.Write("(Nasdaq: PMRX)") end if %> improved $2 5/8 to $14 1/2 after agreeing to sell its business and core company, Scott-Levin, to Quintiles Transnational <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: QTRN)") else Response.Write("(Nasdaq: QTRN)") end if %> in a $197 million stock deal... Bank holding company Provident Bankshares <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PBKS)") else Response.Write("(Nasdaq: PBKS)") end if %> advanced $2 1/4 to $26 5/16 following reports it will join the Standard & Poor's SmallCap 600 Index after the close of trading today. Telecommunications network installer Dycom Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DY)") else Response.Write("(NYSE: DY)") end if %>, which will also join the index, won $1 15/16 to $50 7/16... Online database services company FactSet Research Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FDS)") else Response.Write("(NYSE: FDS)") end if %> advanced $6 to $53 1/2 after it reported fiscal Q1 EPS of $0.39, beating last year's $0.25 figure and a nickel above the four-analyst estimate reported by First Call.
Contract electronics manufacturer Solectron <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SLR)") else Response.Write("(NYSE: SLR)") end if %> ran up $6 3/4 to $75 1/2 after two brokerages upgraded the stock today following Monday's news of Q1 EPS that beat Street estimates by $0.02 at $0.52... Information technology services provider Maximus Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MMS)") else Response.Write("(NYSE: MMS)") end if %> grabbed $1 7/8 to $30 3/8 after Donaldson, Lufkin & Jenrette started the company with a "buy" rating... Competitive local exchange carrier Electric Lightwave <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ELIX)") else Response.Write("(Nasdaq: ELIX)") end if %> gained $1 5/32 to $8 1/16 following Bear Stearns' starting the company at "buy"... Healthcare information services company IMS Health <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RX)") else Response.Write("(NYSE: RX)") end if %> swelled $1 11/16 to $68 3/4 after announcing plans for a 2-for-1 stock split effective Jan. 15... Micro Therapeutics <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MTIX)") else Response.Write("(Nasdaq: MTIX)") end if %>, which makes minimally invasive devices for vascular treatments, stitched up $1 7/8 to $11 3/8 after it said at a conference that it is preparing to launch its first guidewire product, enabling access to blood vessels in the brain.
Eastman Chemical Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EMN)") else Response.Write("(NYSE: EMN)") end if %> spilled $10 3/4 to $46 1/8 after saying the global economic slowdown will result in Q4 EPS between $0.10 and $0.15, well below the First Call mean estimate of $0.82. The company added that it expects the weak operating environment for the chemicals industry will persist into the first quarter of 1999. The announcement comes a day after specialty chemicals maker Witco Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WIT)") else Response.Write("(NYSE: WIT)") end if %> made a similar Q4 earnings warning. Eastman, which derived 18% of its fiscal 1997 sales from the plastic used in food and beverage containers, is a much more basic or commodity chemical business than Witco, which focuses on products such as petroleum additives and catalysts for making PVC. However, with the entire industry mired in the contraction phase of the chemicals cycle after reaching its last top in 1995, the basic/specialty distinction is becoming less important from an earnings standpoint.
In a move that had some Wall Street traders singing Six foot, seven foot, eight foot, SELL!, banana, pineapple, and melon grower Fresh Del Monte Produce <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FDP)") else Response.Write("(NYSE: FDP)") end if %> warned of a Q4 loss today and watched as its fruitless stock fell $2 5/8 to $17 1/2. The company said damage in Central America from November's Hurricane Mitch failed to boost banana prices as expected during the fourth quarter, which will result in a shortfall "comparable" to the loss of $0.10 per share posted during the same period last year. The First Call mean estimate had called for earnings of $0.01 per share for the quarter. On the bright side, the company said its acquisition of North and South American fruit and vegetable producer IAT Group Inc. earlier this year should contribute to a "strong" 1999.
QUICK CUTS: Earth movers and heavy construction equipment manufacturer Caterpillar <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CAT)") else Response.Write("(NYSE: CAT)") end if %> dropped $1 13/16 to $44 7/16 after saying continuing high sales discounts, an unfavorable product mix, and other negative developments will lead to Q4 earnings "moderately less" then the $0.92 per share posted in Q3, which is below the First Call mean estimate of $1.06 per share... Pump products and engineered equipment manufacturer IDEX Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IEX)") else Response.Write("(NYSE: IEX)") end if %> slid $4 1/8 to $26 1/8 after warning that lower sales volume will produce Q4 earnings 15% to 20% below the $0.46 per share earned in Q3... Canadian auto parts and systems maker Magna International <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MGA)") else Response.Write("(NYSE: MGA)") end if %> skidded $1 5/8 to $62 7/16 after J.P. Morgan lowered its rating to "market perform" from "buy."
Integrated oil and gas firm Chevron Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CHV)") else Response.Write("(NYSE: CHV)") end if %> lost $2 11/16 to $83 as the company announced plans to cut costs by $500 million in 1999 through "modest" staff reductions and other measures. The company also said a merger with a rival is "not necessary" to provide "top" shareholder returns down the road... Environmental and infrastructure engineering and construction firm Harding Lawson Associates Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HRDG)") else Response.Write("(Nasdaq: HRDG)") end if %> fell $1 1/2 to $5 7/8 after pre-announcing fiscal Q2 EPS between $0.01 and $0.03, down from the $0.17 earned a year ago. The company said lower revenues on a "same-store" basis will result in fiscal 1999 EPS "similar" to the $0.49 posted in fiscal 1998... Educational software company The Learning Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TLC)") else Response.Write("(NYSE: TLC)") end if %> slid $1 to $24 after Piper Jaffray and Bear Stearns lowered their ratings on the company following yesterday's news that the company will be acquired by toymaker Mattel <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MAT)") else Response.Write("(NYSE: MAT)") end if %>.
Music retailer Musicland <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MLG)") else Response.Write("(NYSE: MLG)") end if %> skipped $7/16 lower to $10 today. In a press release, the company said it knew of no reason for the share price decline "other than concerns about Christmas sales in general." Rival Trans World Entertainment <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TWMC)") else Response.Write("(Nasdaq: TWMC)") end if %> fell $3 to $18 1/4 and CD Warehouse <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CDWI)") else Response.Write("(Nasdaq: CDWI)") end if %> slid $1 5/8 to $16... Auto parts retailer Discount Auto Parts <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DAP)") else Response.Write("(NYSE: DAP)") end if %> stalled $2 to $23 1/16 after reporting fiscal Q2 EPS of $0.35 versus $0.37 a year ago, missing the First Call mean estimate of $0.39... Building and manufacturing controls maker Honeywell <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HON)") else Response.Write("(NYSE: HON)") end if %> dropped $3 5/16 to $73 1/8 on concern that the company will post negative results when it reports its orders for November tomorrow.
FOOL
ON THE HILL
An Investment Opinion
by
Warren Gump
It Isn't Junk
You've probably seen them while out on your holiday shopping excursions. Tucked into a strip shopping center or nestled in a nearby mall, they are discretely hidden like a pink flamingo in Florida. The dollar store. Unlike a five and dime where things cost anywhere from 5 cents to several hundred dollars, dollar stores are really what they say. Everything in the store costs a dollar. The most prolific company in the business is Dollar Tree <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DLTR)") else Response.Write("(NYSE: DLTR)") end if %>, which had over 1,000 stores at the end of Q3. Most of the other competitors are smaller, privately held regional chains. (In a somewhat confusing name game, Family Dollar <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FDO)") else Response.Write("(NYSE: FDO)") end if %> and Dollar General <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DG)") else Response.Write("(NYSE: DG)") end if %> are not dollar stores, as their merchandise is sold at various price points.)
Dollar Tree has not only grown its store base, but profits as well. The First Call analyst earnings estimate for the company is $1.04 in 1998, more than triple the $0.34 earned in 1995. During this period, the store base has grown dramatically, rising to 1,054 on September 30, up from 500 units at the end of 1995. While most of the stores are in the Southeast, Midwest, and Mid-Atlantic regions, the company is branching into the Southcentral and Northeast markets. A recently approved acquisitions of privately announced Step Ahead, which operates the 66-unit 98 cents Clearance Center will give the company an initial presence on the West Coast, laying the base for further expansion.
Many of Dollar Tree's competitors have gone out of business since the dollar store fad began in the 1980s. How has the company been able to thrive? It made some strategic decisions in 1991 that changed its course. First, it decided to primarily forego new mall-based stores in favor of lower-rent strip shopping centers. The company seeks to raise sales by locating its stores near a Wal-Mart, Kmart, Target, or a grocery store that generates high levels of traffic among its targeted clientele.
Another change the company implemented was limiting the closeout portion of its business to 15% of overall sales. The bargains and "surprise" factor of ever-changing closeout merchandise is appealing to many customers, but it also results in inconsistent product availability and requires the development of a special set of purchasing skills. With the company's plans to grow the chain dramatically, it felt that a move to less close-out merchandise would be advantageous. To keep excitement in the store, the company buys from 650-750 vendors and regularly changes some of its product offerings. The best selling merchandise categories, accounting for over half of sales, include housewares, food, seasonal, and toys.
How much can you make when you sell a product for a buck? As it turns out, quite a bit. Gross margins have hovered in the 36.5%-37.5% range over the past five years. Operating margins have edged up from 12.2% in 1995 to 12.4% last year. This high operating margin is possible because only 25% of its sales goes for sales and administrative expenses. As a basis of comparison, even though Consolidated Stores <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CNS)") else Response.Write("(NYSE: CNS)") end if %>, the operator of Odd Lots, Big Lots, and K-B Toys, had a gross margin of 42%, its operating margin was only 8% in 1996. Consolidated's higher gross margin was more than offset by selling and administrative expenses that ate up 34% of sales. (Consolidated's results for 1997 were a bad comparison as they were skewed by merger activity.)
In addition to having great operating margins, Dollar Tree's earnings have benefited from strong same-store sales growth. Over the past five years, growth has exceeded 6% every year. In 1996, the gain was 6.2% and in 1997 the company posted "comps" of 7.8%. During the first six months of 1998, the same-store sales growth was an impressive 8.8%. Comps in this year's Q3, however, slowed down to 2.9%. The company didn't give a clear explanation for this slowdown in its press release or 10-Q. While it would be jumping the gun for long-term shareholders to worry considerably about one aberrant quarter, this number will need to be watched.
Another number that will need to be monitored is the company's inventory level. At the end of September, the company held $184 million in merchandise, up 39% from the same period last year. The store base during this time had only increased 22%, leaving average inventory per store up nearly 10% to $170,000. In addition to an increasing store size, the company explained that it sped up shipments from Asian countries to ensure its merchandise would arrive in time for Christmas. In a way, this was a shrewd move as many news stories have discussed the difficulty and expense many importers are having this season. At the same time, Dollar Tree could be in trouble if sales growth tempers and it is stuck with a bunch of extra inventory -- that might lead to a temporary name change to "Two for a Dollar Tree."
To be honest with you, without any knowledge of this company except having passed a few of its stores, I expected that my opinion of Dollar Tree would be decidedly negative. Having looked into the financials, however, I am rather impressed. The company has done an excellent job executing a concept that many others have failed at operating. The balance sheet has been managed conservatively and the operating results have been superb for several years.
The recent slowdown in same-store sales and rising inventories is reason to give investors pause, however. While the company is definitely not junk, I'm not fully convinced it's a gem worth 38x this year's earnings estimates (First Call estimates call for 25% long-term growth). To prove that, it will need to pull through this Christmas season with strong comps, flat-to-rising margins, and a slowdown in same-store inventory growth.
Please see the Motley Fool's Conference Calls page for call information and links to synopses.
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