Children's Place Inc. (PLCE) is a specialty retailer that sells accessories, footwear, and other items for children. The company has over a thousand stores in North America and also sells through its website and wholesale. It reaches more than a dozen other countries, with franchise partners operating stores, shops, or e-commerce sites.
The company has undertaken growth efforts such as enhancing its digital capabilities, augmenting its supply chain, and improving its financial flexibility. PLCE had a strong first-quarter, driven by a favorable response towards its product assortment, higher price realization, and consumers spending stimulus checks.
From a liquidity standpoint, the company has a current ratio of 0.9, which indicates it may not be able to cover short-term obligations. In addition, the company has a high debt-to-equity ratio of 4.1.
While PLCE had a strong first quarter, revenue growth has essentially been flat over the past five years, while earnings have fallen an average of 17.7% per year over the same period. However, analysts forecast earnings to surge 120.9% year over year in the current quarter.
The stock appears fairly valued with a forward P/E of 20.66. The stock was trending higher since September, but has shown mixed performance recently as shown in the chart below.
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Take a look at the 1-year chart of PLCE below with added notations:
PLCE has been in a clear trend higher during the past year, but the stock has recently struggled to get past the $100 resistance (red), which is also the 52-week high. That mark is also preventing the stock from hitting new highs. PLCE looks to be dropping back, which may mean another test of the key level at $85 (green).
The possible long position on the stock would be on a breakout above the $100 resistance level which is also the 52-week high.
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PLCE shares were trading at $87.96 per share on Thursday morning, down $2.13 (-2.36%). Year-to-date, PLCE has gained 75.57%, versus a 17.03% rise in the benchmark S&P 500 index during the same period.
About the Author: Christian Tharp
I am an expert stock market coach having helped over 4000 beginner and advanced traders & investors from around the world take control of their financial futures. I also write stock market related articles for the Adam Mesh Trading Group and Yolo Publishing.
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