• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Consumer Discretionary

Vera Bradley Fattens Bottom-Fishers' Wallets With Post-Earnings Surge

The stock of the handbag maker had been dwelling in the valley until it posted bottom-line results this week that were better than expected.
By JONATHAN HELLER
Dec 08, 2017 | 12:00 PM EST
Stocks quotes in this article: VRA

Vera Bradley Inc. (VRA) , sagging retailer of handbags, purses, and travel items that was better known in my household years back as "not another one," has given some bottom-fishing investors an early Christmas present this year.

The name had fallen off a cliff and was dwelling in the valley for much of 2017. However, on Wednesday, Vera Bradley put up better-than-expected third-quarter results, beating consensus earnings estimates by nine cents a share (23 cents vs. 14-cent consensus). The company narrowly missed the $114.6 million revenue consensus by about $500,000. This was Vera Bradley's fifth straight earnings beat, but that has been during a period of declining estimates and wasn't necessarily a streak to celebrate.

Still, this was a good quarter, showing signs that the company may be on better footing. The balance sheet remains solid, which was one of the things that led me to the name. The company ended the quarter with $108.1 million, or $3 per share, in cash and investments, and no debt. It now trades at 2.5 times net current asset value.

Shares are up around 30% the past two days, and Wednesday's trading volume of 4.85 million shares was heavy for this name, more than 10 times normal average volume. Nonetheless, I'm not sure where Vera Bradley shares will head the rest of this year. The stock still is down 3.6% year to date, and it is name I held out as potential tax-loss selling candidate in late October, though it is up 57% since that column ran.

This is one of the last names I'd ever imagined owning -- a retailer wrestling with the ever-changing whims and desires of the consumer. To me, Vera Bradley products seemed to be a bit of a fad, judging by their declining popularity in our home. It appeared to be another case where growth investors gave up and moved on.

Indeed, this was a $50 stock back in 2011 that found its way all the way down to the $7 range in October. While the company has not had an unprofitable year since going public in 2010, both revenue and profits have been in decline the last few years. Couple that with the market's overall disdain for retail, especially small specialty retail, and you could add Vera Bradley to the long list of retail companies that have been hammered in an overall positive market environment. For many of those affected, this has been a depression in the midst of a bull market.

But even faddish names can have value. As disappointing as Vera Bradley has been over the years, there is a point at which owning such a name can make sense. When the growth crowd moves on, companies often can be punished well beyond what they deserve. That may be the case with Vera Bradley -- at least that was my premise for doing the unthinkable and taking a position. It may never be a $50 or even $40 stock again, but the punishment did not seem to fit the crime. It is still early in this turnaround story, if that's indeed what this is.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Heller was long VRA.

TAGS: Investing | U.S. Equity | Consumer Discretionary | Earnings | Consumer | How-to | Stocks

More from Consumer Discretionary

Penn National: Should Investors Put Their Chips Down?

Bruce Kamich
Jun 28, 2022 12:13 PM EDT

Let's check out the charts and indicators on this operator of casinos and racetracks.

I'm Warming Up to Carnival, but Not Ready to Climb Aboard Yet

Jonathan Heller
Jun 27, 2022 10:00 AM EDT

The stock price of a cruise line operator is becoming more reasonable, but its heavy debt load remains a huge concern.

There's No Clear Sailing Ahead for Carnival: Here's How to Play It

Stephen Guilfoyle
Jun 24, 2022 11:32 AM EDT

CCL did lose a lot of money, much more than anticipated, but there are positives.

Bearish Bets: 3 Well-Known Stocks You Should Consider Shorting This Week

Bob Lang
Jun 19, 2022 10:30 AM EDT

These recently downgraded names are displaying both quantitative and technical deterioration.

Beyond Meat Gives Investors Something to Chew On

Bruce Kamich
Jun 15, 2022 1:50 PM EDT

This veggie name is rallying sharply after a summer promotion announcement, but here's my beef with the charts.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 09:49 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    Stop Wishing, Hoping, and Praying and Take Control...
  • 07:59 PM EDT PAUL PRICE

    Very Good Quarterly Numbers From Bassett Furniture (BSET)

    Bassett Furniture blew right through analysts es...
  • 04:41 PM EDT PAUL PRICE

    First-Half Results - Putrid; Second Half Results - Likely to Be Much Better

    It's great that we're done with June. 2022 mark...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login