Pier 1 stock has corrected nearly all its gains of 2019. It’s a disappointing realization for investors who hoped Pier 1 Imports (NYSE:PIR) was bucking the downward trend.
Where to now for PIR stock?
Pier 1 Stock
It’s been a sad but familiar tale for retailer Pier 1. For quite some time now, the company has struggled due to the massive impact of online-only home furnishing retailers.
Simply put, online-only retailers often price their wares far lower than their traditional brick and mortar counterparts. For one thing, operational costs are much lower, and this allows for significant margin room.
One example is Wayfair (NYSE:W); when it entered the space, it stole a massive percent of the market share from Pier 1 Imports.
A result of this has been a huge decline in sales and margins for Pier 1 and little to no profits either. Of course, PIR stock has felt the pressure; five years ago, it sold for over $280 per share, but by late 2018, that figure depleted to $27 USD.
Pier 1 Stock Rising from the Ashes
But things got interesting again in 2019. Shares started the year selling for $6.20 approximately, and by March, had skyrocketed to $28 per share.
However, negative profits and a shrinking sales base caused Pier 1 stock to decline, and at $6.18 at the time of writing, it has wiped away its impressive gains. Now, at current prices, Pier 1 Imports is being valued at $26.64 million.
However, some analysts don’t believe anything to be over. According to Investorplace:
“All Pier 1 needs is 2% profit margins on a $1 billion sales base to net $20 million in profits. Even a super depressed 10x multiple on that implies a $200 million market cap under such scenarios.”
There may be much more needed to truly rescue Pier 1 from a destabilizing climate, but if management can cut costs and keep sales from decreasing, investors might see some short-term gains in this speculative stock.
What do you think of Pier 1 stock?
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