This trend continues if you look at the company’s expected revenue growth this year. Francesca’s Holdings Corp (NASDAQ:FRAN)’s handily beats the competition with expected revenue growth of just under 25% for 2013. The company’s peer group on the other hand, is expected to post revenue growth of between 1.4% and 3.2%.
Francesca’s has also been consistently beating earnings expectations up to this point. In the last four quarters, the company beat earnings three different times by an average of 8.95%. None of the company’s competition comes even close to this performance. Relatively speaking, the next best performer was Abercrombie & Fitch Co. (NYSE:ANF), which beat earnings three times, missed once, and exceeded estimates by an average of 3.28%. American Eagle performed slightly less well, beating earnings twice, missing once, and averaging a beat of 2.3%. Of the group, The Buckle, Inc. (NYSE:BKE) beat earnings twice, missed once, but on average only beat expectations by 0.58%.
As you can see, if investors are looking for the fastest revenue growth, earnings growth, or the most consistent performance beating analyst expectations, Francesco’s takes all three categories.
What’s the Bottom Line?
It’s one thing for a company to report impressive earnings growth, it’s something else for that same company to turn earnings growth into free cash flow that can reward investors. One way to compare companies in an apples to apples manner is to look at how much free cash flow they generate for each dollar of sales.
Using this measure of free cash flow per dollar of sales, Francesca’s is performing quite well. The only peer to generate more free cash flow from each dollar of sales is The Buckle, Inc. (NYSE:BKE), which brings in about $0.12. By comparison, Francesca’s generated about $0.10 in free cash flow for every dollar of sales. The far more established American Eagle Outfitters (NYSE:AEO) and Abercrombie & Fitch Co. (NYSE:ANF) generated $0.07 and $0.04 in free cash flow respectively.
While I wouldn’t call this an exhaustive investigation into Francesca’s, we’ve seen that the company’s revenue, earnings growth, and historical earnings performance beats three of their well-respected peers. The company generates significant free cash flow from each dollar of sales, and it seems a safe assumption as the company grows it will be able to leverage its expenses to improve free cash flow even further. For growth investors, I would definitely suggest adding FRAN to your personalized Watchlist on Fool.com. Francesca’s operates in a difficult industry, but the company seems to have its finger on the pulse of fashion for young adults. If management can keep this up, the stock’s performance could cause investors’ hearts to race as well.
Chad Henage has no position in any stocks mentioned. The Motley Fool recommends The Buckle. The Motley Fool owns shares of The Buckle. Chad is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article An Opportunity in a Difficult Business originally appeared on Fool.com is written by Chad Henage.
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