Why rue21's Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of clothing retailer rue21 (NAS: RUE) rose as much as 10% today after the company released earnings and guidance.

So what: Revenue in the fiscal first quarter rose 19% to $205.6 million, just barely topping estimates. Net income was $11.6 million in the quarter, or $0.46 per share, $0.03 ahead of estimates. The company increased its earnings guidance by $0.02 to a range of $1.76 to $1.81 per share for the full year.

Now what: The numbers were good but not great, and the stock has settled down some from the initial pop. Same-store sales rose only 1.7%, and I'd like to see that drive revenue growth instead of just new store openings. Shares now trade at 16 times the top end of guidance, not a bad price considering the company's growth. I'm not excited enough about the growth to jump into shares today but if same-store sales improve, the stock could be a nice value.

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At the time thisarticle was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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