Gordmans Stores, Inc. (GMAN): Time To Buy This Retailer?

While Gordmans Stores, Inc. (NASDAQ:GMAN) does trade a lower P/E, its earnings are expected to decline significantly this year as will its return metrics. Dillard’s, Inc. (NYSE:DDS) is expected to earn $7.00 this year and $7.70 the following year according to the consensus forecast. This is up from $6.31 the prior year. In terms of return on assets, Gordmans crushes the competitors with an ROA of 13.5% vs Dilliards’ 8% and Stage’s 5.7%.  The capital structure of these companies ranges drastically from a D/E ratio for Gordmans of 0.18 to 2.45 for Stages and 41.8 for Dilliards.  Dilliards’ stock price is up 25% this last year, partially due to their share repurchase announcement, and Stage Stores Inc (NYSE:SSI) is up 69%. Gordmans Stores, Inc. (NASDAQ:GMAN) is down 43% in the same time frame.

Conclusion

Gordmans has hit a rough patch in its growth but if its growth initiatives have effect, it does not look expensive versus its longer term earnings power. Also, if same store sale can surprise versus expectations later in the year, the shares could appreciate substantially. At this point, unless consumer spending takes a bigger than expected hit, Gordmans Stores, Inc. (NASDAQ:GMAN) downside risk appears limited compared to the potential upside.

The article Time To Buy This Retailer? originally appeared on Fool.com and is written by Mike Thiessen.

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