Aritzia Inc. (TSX:ATZ) released its second-quarter earnings on Thursday, which saw the company post adjusted earnings per share (EPS) of $0.09 compared to $0.08 a year ago. Net revenue for the quarter was also up more than 10% from the previous year with sales totaling $174 million. Let’s dig a bit deeper into the earnings report to see if the stock is a good buy today. Revenue growth driven by new stores The company’s comparable sales growth was just 5.4%, down significantly from the 16.4% growth it saw a year ago. A big portion of the increase in total revenue came…
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The company’s comparable sales growth was just 5.4%, down significantly from the 16.4% growth it saw a year ago. A big portion of the increase in total revenue came from new store openings, as Aritzia opened eight new locations in the past year. The company carefully chooses its locations, and that gives it a lot of options for potential growth. Aritzia has already opened a Babaton store in Vancouver in Q3 and plans another two more store openings before the end of the fiscal year.
Aritzia was listed on the TSX almost a year ago today, and in that year, it has seen its share price drop over 17%. The stock is trading at more than seven times its book value, and if it were to achieve even a price-to-earnings multiple of 30, the company would need to see an EPS of $0.48, which, at this rate, seems improbable without a significant quarter, as this is the second consecutive quarter where the company’s per-share earnings are down.
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Fool contributor David Jagielski has no position in any stocks mentioned.