Insiders Are Going Shopping at Francesca’s

Page 1 of 2

Our database of insider trading filings shows three insiders at Francesca’s Holdings Corp (NASDAQ:FRAN) buying the stock on December 12th at prices generally between $23.20 and $23.60. CEO John Merritt bought 10,000 shares, an executive vice president bought about 4,200 shares, and Neill Davis, the company’s president, purchased 3,000 shares. The stock had already seen a round of insider buying in September (see a history of insider purchases at Francesca’s). Francesca’s is a specialty retailer with a market capitalization of just over $1 billion, selling women’s clothing, jewelry, and accessories.

Studies show that, statistically, stocks bought by insiders tend to outperform the market (find out more about studies on insider trading). We think that this is partly because insiders will normally avoid buying a stock- after all, their financial situation is already tied to the company’s prospects, and diversification is rational. The exception would be if there is a good deal of confidence in the stock. Stocks seeing consensus insider purchases, it turns out, are particularly good performers on average. As a result we think that it’s a good idea to examine Francesca’s Holdings Corp more closely and see if it could be one of these winners.

Ken Griffin CITADEL INVESTMENT GROUP

The company recently filed its 10-Q for the quarter ending in October 2012 (the third of its fiscal year ending January 2013). Revenue grew by 43%, due to both an increase in the number of locations (27% higher than a year ago, with roughly the same percentage increase in total square footage) and significantly higher comp sales and revenue per square foot. Operating and net income more than doubled, bringing earnings per share to 72 cents for the year. That places the stock at 26 times trailing earnings, but we’d expect that net income will be significantly higher in the current quarter than a year ago. Analyst consensus is for 28 cents, which would pull the P/E down to 24. However, that suggests little seasonality as it would only be a small improvement on a q/q basis. The sell-side expects strong growth over the next several years, as despite this high starting point the five-year PEG ratio is 0.8.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

Most Expensive Day-Care in New York City

The 10 Cheapest Places to Retire Abroad

Top 10 Most Expensive Luxury Cars in the World – 2014

Killer Small Business Ideas

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!