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The Case for a J. Crew IPO in Five Charts

Timing an initial public offering is a tricky endeavor. If the business is really promising, its private owners won’t be keen on ceding future returns to the bunch of strangers who will buy the stock. And then there’s the climate of the stock market at large to consider and how badly a business needs capital.

J. Crew’s private equity owners have been weighing all the above as they decide whether now is the time to sell the apparel empire to the sweaty masses. With value estimates around $5 billion, the clothing company already appears to be in the black for TPG Capital and Leonard Green & Partners, the two firms that bought it three years ago for $2.64 billion.

The question is, could they get more from an IPO—or some other salemdash;a year or two from now? That’s debatable, but rest assured the M&A bankers J. Crew is reportedly interviewing at the moment will be pushing for an IPO now. Their pitch-decks are sure to include some version of the following:

It’s a pretty great time for IPOs.

It’s also a pretty bullish time for the stock market at large (according to the price-earnings ratio of the Standard & Poor’s 500 Index)…

… and on-trend retail companies such as Hugo Boss (BOSS:GY), Michael Kors (KORS) and Ted Baker (TED:LN) are valued even more handsomely.

J. Crew, meanwhile, is certainly on-trend …

… but it’s going to need some money if it wants to scale up to catch the big boys.

Stock is an associate editor for Twitter: @kylestock

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