PLCE - Children's Place: Situation Is Improving But The Stock Is Still A Hold For Conservative Investors

2024-05-28 06:19:18 ET

Summary

• Children's Place has high leverage and operational losses, but a new controlling shareholder and management team are attempting a turnaround.
• PLCE stock fell over 50% in April due to late financial reporting, but doubled to close to $14 after presenting its 10-K.
• The new management team is focused on long-term cash flow generation and returns on capital, with small strategic shifts in pricing and distribution center expansion.
• The company's liquidity situation is much better than in March, but the execution and market risks are still high.

Children's Place ( PLCE ) is a children's apparel retailer. It has operational losses, high leverage, and a new controlling shareholder and management team trying to turn the company around.

I covered PLCE for the first time in March 2024 with a Hold rating. The company's dramatic financial situation made the stock unsafe for conservative investment. However, the new controlling shareholder provided financing and the opportunity for a turnaround, making the stock qualified for speculative investment....

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