Express, Inc. operates as an apparel and accessories retailer. It offers apparel and accessories for women and men for work, casual, jeanswear, and going-out occasions. The company sells its products through its e-commerce Website, express.com; and mobile app, as well as franchisees Express locations in Latin America.
Express, Inc (EXPR) reported its 1st quarter earnings on April 2019 and surprised its investors with more than expected good earnings. Wall street was expecting an EPS of -$0.31 on a revenue of 429.9 Million. The company reported -$0.15 on a revenue of 451.3 Million. For the upcoming quarter (results expected on August 28,2019), Express forecasts a net loss of 13 cents to 17 cents a share; same store sales are projected to drop 6% to 8%. Consensus expectation is a loss of 14 cents a share. Express, Inc stock price dropped 35% after its last quarterly results.
Where is the stock heading from here? Would the same downward momentum continue?. While the stock is bearish and has demonstrated a strong downward trend, here are some parameters we can use to determine whether its is oversold and undervalued.
Book value of equity per share is calculated as follows: (total assets - total liabilities) / (total number of outstanding shares). When a stock is undervalued, the book value per share will be higher as compared to its current stock price in the market. On the contrary, if a stock is overvalued, the book value per share will be lower as compared to its stock price. For Express, Inc the book value per share for the most recent quarter is $8.42 and the closing price of this stock as of August 23, 2019 is $1.94. In other words, this stock is trading 4.34 times lower than its book value
The Relative Strength Index (RSI), a momentum oscillator developed by J. Welles Wilder, measures the speed and change of price movements. The RSI has a range between 0 and 100. Traditionally, the stock is considered overbought when RSI is above 70 and oversold when it is below 30. Most recent entry of Express, Inc. into the oversold territory was on 12/21/2018 and overbought territory was on 05/16/2018.
"Buy/Sell" volume ratio is a proprietary indicator that measures the buy and sell volume of a security. This represents the strength of the move in either direction. This oscillator ranges between 0 and 100, however the characteristics widely differ based on the trading volume and momentum. For Express, Inc. the oversold and overbought is fixed at 59 and 14.
Another important volatility indicator to consider is the 14 day ATR (Average True Range). Average True Range is not a directional indicator and it represents the energy behind the move. Beta coefficient (β) measures the volatility of a stock with respect to the market. Beta for Express, Inc. is (3Y Monthly) 0.90.
The current ratio is a liquidity ratio that measures whether or not a firm has enough resources to meet its short-term obligations. It compares a firm's current assets to its current liabilities, and is expressed as follows: Current ratio = Current Assets/Current Liabilities. If the value is less than 1, it means that the current liabilities exceed current assets and vice versa.. As of Dec 31,2018 current ratio for EXPR is 1.3
For reasons explained above, we believe this stock is clearly undervalued and oversold. There is a high probability for this stock to make an upward move (10%) from its current price in the upcoming weeks/months. At the same, it is important to consider the sluggishness in the retail sector at this time. Express, Inc falls in the retail sector - Apparel Stores.
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Financial information cited in this article are taken from Yahoo Finance (http://www.yahoo.com/finance); EPS data is taken from Zacks Research (http://www.zacks.com); some of the definitions have been taken from Wikipedia (www.wikipedia.com)