A Second Act For Pier 1?

A Time To Buy Low
Shares of Pier 1 Imports (PIR ) are in the doghouse. The stock is off 32% in the past 16 weeks, and most Wall Street analysts covering the retailer are down on it. For five quarters, Pier 1's earnings have come in short of the forecasts its managers offered up front, says A.G. Edwards. Now annual earnings per share will be down for a second year, at $1.21, when the fiscal year ends in February, 2005, according to analysts tracked by Reuters Estimates.

But Robert Olstein, manager of the Olstein Financial Alert Fund (OFALX ), says that with the stock so far down, it is cheap enough to buy. He owns 1.6 million shares. "Pessimism and bad news create the low price we want," says Olstein. He's upbeat because the 42-year-old company is reworking the mix of merchandise, overhauling the advertising, and retraining sales staff. Same-store sales will start to recover, possibly as soon as the end of summer, he says, and the stock, now at 17, will jump to 25 -- as Wall Street sees Pier 1's underlying earning power of $1.50 a share.

There's a precedent for Olstein's view. When Pier 1 was in a similar fix in 1999, this column quoted another lonely bull and saw the stock climb 50% in six months.

Gene Marcial is away for several weeks.

Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

By David Henry

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