Fireworks were reserved for Independence Day Celebrations with little left for insider buying activity. However, there was one big bang and eye-catching buy on last week’s roster. The only other time The Children’s Place, Inc. (PLCE) Chief Executive Officer (CEO) and President Jane Elfers bought stock, it nearly doubled in price in about 18-months.
Elfers acquired 18,100 shares for a little more than $1 million on December 13, 2019 at $55.54 per share. On June 1, 2021, she unloaded more than $9 million in stock at $96.24. Selling stock has been the norm for the CEO as she’s sold PLCE 19 times, collecting in excess of $67 million. On July 5, 2023, the President and CEO made her second million-dollar purchase, 43,000 shares at $23.70. (1)
The Children’s Place is the largest pure-play children’s specialty apparel retailer in North America. The Company designs, contracts to manufacture, sells at retail and wholesale, and licenses to sell fashionable, high-quality merchandise predominantly at value prices, primarily under the proprietary “The Children’s Place”, “Place”, “Baby Place”, “Gymboree”, “Sugar & Jade” and “PJ Place” brand names.
The Company has online stores at www.childrensplace.com, www.gymboree.com,www.sugarandjade.com and www.pjplace.com and, as of April 29, 2023, the Company had 599 stores in the United States, Canada, and Puerto Rico and the Company’s five international franchise partners had 212 international points of distribution in 15 countries.
Wall Street expects the children’s apparel company’s earnings to experience a major rebound this year and next. The consensus earnings per share (EPS) estimate for this year is $1.24 compared to a loss of eight cents last year. Next year, the bottom line is predicted to jump to $3.69 per share. Sales are expected to be steady at $1.59 billion this year and next compared, both lower than last year’s $1.71 billion. (2)
Since sales are forecasted to be essentially flat year-over-year, we’ll focus on earnings to develop potential price points using The Children’s Place’s recent price to earnings (P/E) history. In the past five years, PLCE was valued as low as 3.47 times earnings, as high as 22.05 times and averaging 12.15.
Based on fiscal 2025’s (next year) earnings estimates and the retailer’s half-decade P/E range, we calculate the following potential price targets.
Low P/E: $12.80
Average P/E: $44.83
Max P/E: $81.36
Current Peer 28.6 P/E: $105.53
PLCE trades at $26.45 as of the close of trading on July 7, 2023 with a 52-week range of $14.27 to $57. Wall Street puts a one-year price target of $28.75 on the stock and they do not pay a dividend as of this writing.
Longer-term. PLCE could see its top line benefit from global trends. According to Fortune Business Insights, “The global kids apparel market size was valued at USD 187.29 billion in 2022 and is expected to grow from USD 198.80 in 2023 to USD 318.34 billion in 2030, exhibiting a CAGR [compound annual growth rate] of 6.96 percent during the forecast period.” (3)
OVERALL: The Children’s Place, Inc. (PLCE) anticipated EPS rebound could give the stock price a lift in the next 12-18 months based on the specialty retailer’s recent P/E history and expected earnings results. CEO and President Jane Elfers’ prior success being on the right side of her only other buy is encouraging as well as the $1 million commitment. Global trends could help PLCE’s top line get back on track through 2030, which could inspire Wall Street upgrades.
The Children’s Place, Inc. (PLCE) is high volatile with a five-year beta of 2.14 (The S&P 500’s beta is 1). (4) That means PLCE is only appropriate for aggressive investors with a time horizon of at least 18-months.
Rich Meyers
1 – https://www.secform4.com/insider-trading/1479985.htm
2 – https://finance.yahoo.com/quote/PLCE/analysis?p=PLCE
3 – https://www.fortunebusinessinsights.com/kids-apparel-market-104630
4 – https://finance.yahoo.com/quote/PLCE/key-statistics?p=PLCE