Looking for the star stocks of the clothing retail sector in US stocks.

Today is April 25, 2022, Monday, before the U. S. stock market, let's take an inventory of the clothing retail sector. A total of 35 stocks, market capitalization from 11.85 million to 73.7 billion, of which more than 300 million are 30, we will study these 30 stocks.

From the perspective of price-to-earnings ratio, there are 6 below 0, 13 below 8.5, 8 from 8.5 to 25, and 3 above 25. The profitability of the sector is medium and the valuation is medium.

Let's take a look at 13 stocks with a price-to-earnings ratio of less than 8.5.

The income statement explains why operating profit does not increase with turnover, due to an increase in the share of main operating costs and operating expenses in 2018 and mainly due to a significant increase in sales and management expenses in 2019 and 2020.

The income statement also explains that net profit soared in 2019 because "other special expenses" reached 200 million in 2018, compared with 37 million in 2019. The surge in 2022 was mainly due to a low base in 2021, a decline in the share of operating costs, and other net income of 222 million. Excluding other net income, net profit in 2022 is 810 million, still 100m higher than in 2020, and the corresponding price-to-earnings ratio is 3.44, which is also very low.

Net operating volume has been in the net inflow range, free cash flow has also been a net inflow for five years, the current current ratio is 1.36, quick ratio 0.54, there are some risks in cash flow.

The asset-liability ratio suddenly rose from 34.4% to 62% in 2020, and then fell slightly for another two years. Inventory is now 1.266 billion, which accounts for 14% compared to 8.96 billion revenue, about less than two months of inventory. With 140 million accounts receivable, retail accounts are mainly on credit. Goodwill and intangible assets rose from 180 million to 1.25 billion in 2022, probably due to some acquisitions. The accounts payable is 680 million, and the annual net interest expense is 14 million, which is not a high burden.

The current price-to-earnings ratio is 3.4and the price-to-book ratio is 0.86. the discount is high enough to choose (⭐️)

In the income statement, the decline in business in 2019 was due to an increase in the proportion of main business costs, and the loss in 2021 was due to the fact that main business costs did not decrease with the decline in revenue, but the impact of the epidemic should be one-off.

It currently has a market capitalization of 660 million, or a price-to-earnings ratio of 6.6 based on a net profit of 100 million in 2019. However, revenue growth in 2022 is small compared to 2019, and the company's growth is questionable.

At present, the current ratio is 0.98 and the quick ratio is 0.13. The cash flow is very tight. Short-term borrowing is 175 million yuan, and the current cash is only 55 million.

On the whole, the risk is not small, so we will not consider it for the time being.

The income statement shows that the sharp rise in profits in 2021 is due to the rapid growth of superimposed revenue on the one hand and the decrease in the proportion of operating expenses on the other hand, due to the increase in gross profit (32.4 → 35.5%). In 2022, the gross profit margin further increased to 38.2%, and the proportion of operating expenses decreased further. Coupled with the rapid growth of revenue, the result of a substantial increase in net profit.

The income statement looks very clean and there are no "other" subjects.

Net operating volume and free cash flow have been in the state of net inflow, with a current ratio of 1.42 and a quick ratio of 0.16. Cash flow is very tight.

The asset-liability ratio is 58.6%. At present, there are only 17 million in cash, 13.61 million in receivables, 200 million in inventory, which can sell 140 million per month; short-term lease liabilities of 70 million, payable to 85.65 million, should be sufficient.

At present, the price-to-earnings ratio is 4 times and the price-to-net ratio is 2 times, so you can choose carefully (⭐️).

The main reason for the profit in 2021 is that the gross profit margin has risen from about 44% to 49.5%, and the share of operating expenses has also declined. But whether the one-year earnings in 2022 can be sustained, it is difficult to judge the future trend of high gross margin of 49.5%. The safety cushion of 5.7 times earnings and 5 times book value is not thick enough.

The main reason for the surge in profits in 2021 is that gross profit margin has risen from about 30% to 39.6%, and the share of operating expenses has also declined.

Net operating volume and free cash flow have been net inflows for 5 years, and the overall increase, with a current ratio of 2.88 and a quick ratio of 0.95, shows that cash flow is very safe.

The asset-liability ratio is 44.3%, accounts receivable is 14.16 million, inventory is 285 million, and revenue is 1.33 billion. Goodwill and intangible assets increased from 0 to 44 million in 2022, so there should be acquisitions.

The current price-to-earnings ratio is 5.70.If the average net profit in 2021 and 2022 is 85.5 million, the price-to-earnings ratio is 10.2. taken together, it can be carefully chosen (⭐️).

Net operating volume and free cash flow have been net inflows over the past five years, and the overall increase, with a current ratio of 1.57 and a quick ratio of 1.12, shows that cash flow is very safe.

The asset-liability ratio is 60%, accounts receivable is 12 million, inventory is 102 million, is very low compared to 1.3 billion revenue, and there are no interest-bearing liabilities.

At present, the price-to-earnings ratio is 6. If the average net profit in 2021 and 2022 is 190 million, the price-to-earnings ratio is 8.2. you can choose (⭐️⭐️).

There are 280 million "capital asset impairment" and "other special expenses" in 2021, which are not so high in other years. Gross profit margin rose to 40% in 2022 from 36%, resulting in a big increase in net profit.

The current price-to-earnings ratio is 7.6, which is not very attractive.

The increase in profits in recent years is mainly caused by three factors: the increase in revenue, the increase in gross profit margin and the decline in the proportion of operating expenses.

Net operating volume and free cash flow have been net inflows over the past five years, and the overall increase, with a current ratio of 2.43 and a quick ratio of 1.67, shows that cash flow is very safe.

The asset-liability ratio is 46%, accounts receivable is 14.42 million, inventory is 129 million, which is normal compared to 1.2 billion revenue, and there are no interest-bearing liabilities.

According to the analysis, a general rule has been found that these clothing retail companies have significantly increased their debt ratio in 2020 (actually 2019), mainly due to an increase in "leasing debt". Pay attention to the reasons when looking at the industry report later. In addition, gross profit margins have increased significantly in 2022, which is also a common feature.

At present, the price-to-earnings ratio is 7.8 and the price-to-book ratio is 1.58. Even if the price-to-earnings ratio is less than 10 based on the net profit of 76.22 million in 2021, you can choose (⭐️⭐️).

In the income statement, compared with 2020 and 2022, revenue increased by 90 million, costs decreased by 70 million, and expenses decreased by 100 million, so operating profit increased by 260 million, of which the decrease was contributed by sales expenses.

In addition, gross profit margin has increased from 60% in the past to 62.3%, which is far higher than the level of the industry.

The current price-to-earnings ratio is 8.3 and the price-to-book ratio is 2.1, which will be decided by looking at the follow-up results.

Let's take a look at 11 stocks with a price-to-earnings ratio of more than 8.5.

At present, the discount of 8.5 times earnings is not enough.

Gross profit margin rose from 37% to 45% in 2022, which is the basis for a big increase in profits in 2022, but it remains to be seen whether there is any sustainability of such a big change.

The current price-to-earnings ratio of 8.9 times earnings is not very attractive.

The current price-to-earnings ratio of 11.5 times earnings needs more growth data.

One of the reasons for the rising profits is that the gross profit margin has increased from 30% to 33% in four years.

The net operating volume is net inflow for 5 years, and the free cash flow is net inflow except 2020, with a current ratio of 1.69 and a quick ratio of 0.39. Cash flow is relatively poor, but it should not affect normal operation.

Before the annual report comes out, you can choose carefully (⭐️)

At present, the discount of 48 times earnings is not enough.

Finally, look at the six loss-making stocks with a price-to-earnings ratio of less than 0.

On the whole, the revenue of the clothing retail sector is growing rapidly, and the gross profit margin has increased recently, resulting in a big increase in the profit level of the recent annual report, but there are persistent doubts and a total of 6 stocks have been selected.

Star description:
⭐️: the best choice, with obvious profit and growth advantages, and a big discount on the price.
⭐️⭐️: the value or price is slightly lower than the best choice
⭐️: only suitable for certain preferred portfolios, such as ultra-small cap stocks, ultra-fast growth stocks, crisis stocks, defective stocks, etc.

Combination recommendations:
If less than 10, choose only stocks with an investment index of 3 stars.
If there are less than 30, then only 2-star and 3-star stocks are selected.
If more than 30, then 1 star to 3 stars can be selected.
Each star can set an investment target, such as $200 for one star, $400 for two stars and $600,800 for three stars.