When dealing with newly public companies, you need to know your IPO, Cramer said Thursday.
Take Francesca’s Holdings , for example. The retailer went public back on July 21st at $17 a share. While it initially roared, it has since settled back down to about $20.
So is FRAN worth owning? Well, Cramer’s not so sure yet.
“At the moment this stock is neither a buy nor a sell, it's a wait-and-see,” he said.
That’s because while he sees a lot of positives for the company, he sees one really big negative that causes him concern.
First, the good: the company is opening new stores at a rapid pace, and it has a lot of room to expand. It also has impressive, industry-leading margins that could go higher.
However, Francesca’s same-store sales has slowed down to around five percent. That’s down about two-thirds of what the company did last year.
“That deceleration, from an admittedly elevated level, is simply not what you want to see from a retailer that's putting up new stores at a breakneck pace,” Cramer said. “It's more like what you'd expect from a more mature retailer, a Macy's or a Target.”
So Cramer wants to see an acceleration of comp store numbers to at least the high single digit levels in order to justify the very high price to earnings multiple the company has.
He suggests waiting for the company’s next quarter before making a decision about whether to buy or sell.
“We just don’t know enough to pull the trigger either way,” he said.
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