PE Firms Licking Their Chops as Talbots (TLB) Trades at 2-Year Low

With shares of Talbots Inc. (NYSE: TLB) recently getting killed following disappointing Q1 results and guidance on Tuesday of this week (down 40 percent that day), rumors Friday suggest a private-equity firm may now be taking a looking at the company.

Currently trading at just 2.7x EBIT, Talbots is now the cheapest U.S. apparel company worth more than $100 million.

While the valuation looks attractive, Janney's Adrienne Tennant, in a research note earlier this week, argued the balance sheet may deter a potential buyer. A private-equity firm would need to lever up the balance sheet to reach requisite internal rates of return, Tennant pointed out.

Janney currently has a Sell rating and $3 target on Talbots shares.

Talbots has lost 90 percent of its market value over the last 10 years, and is looking for something to turn around the company. An analyst at Nomura believes the company needs new blood in its management team and money to conduct a brand turnaround.

Talbots shares are bouncing once again Friday morning. After rebounding more than 7 percent Thursday, the stock is up nearly 3 percent just after the opening bell this morning.

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Wolfe remains "broadly bullish on AI semis stocks", names Top Pick
• Decibel Cannabis posts 19% revenue gain, plans share consolidation
• Bernstein on whether Hershey (HSY) could eventually step up to buy Mondelez (MDLZ)