Here’s our EPS walk by line item, including SIGMA chart heading into the quarter. I like the comp trajectory relative to management’s guidance, as well as the gross margin in light of where last quarter’s inventory levels ended. What I don’t like is that after this quarter, FINL faces its toughest Gross Margin compares of the year, and does not have much in SG&A to act as a cushion. Also, after seven quarters of declining capex, this trend is starting to flatten out. Combined with working capital reductions FINL is going to need to see an acceleration in operating results in order to bolster cash flow. Yes, this name is cheap, and one of the higher quality names in the space, but there are other companies out there that are higher quality, cheaper, and are facing an expanding free cash flow trajectory.
