Analyst Bill Dreher says results are in-line with his estimates and a penny above the Street estimates. Although sales comparisons fell short and gross margins rose 312 basis points to 36.48% of sales, and says this quarter showed the strongest margin performance in its history as a public company.
He notes this more than recovered a 251-basis-point loss from last year. He raised the 41 cents third-quarter earnings per share estimate to 43 cents, which assumes +2.5% sales comparisons, and sees an 125-basis-point increase in gross margins. Dreher says this brings $2.13 fiscal 2005 (Jan.) earnings per share estimate to $2.17, which is in line with management's guidance.
He believes the current level reflects a very compelling entry point. Dreher reiterated the buy rating and $55 target.