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Aggressive growth stock pick: HSN
Shares of HSN Inc. (HSNI +0.63%) have been climbing over the past year. Meanwhile, the multi-channel retailer has outperformed the Zacks Consensus Estimate in 10 of the past 13 quarters.

The stocks momentum underscores HSNI's differentiated merchandise offerings, digital expansion and strategic investments in brands and acquisitions. This Zacks No. 1 Rank ("strong buy") surged 52.4% in a year and currently trades close to its 52-week high of $56.97 (attained on January 2, 2013).

On Oct. 31, HSN reported third-quarter earnings of 61 cents per share, substantially beating the Zacks Consensus Estimate by 24.5% and last year's performance by 48.8%.

Consolidated net sales of $778.8 million jumped 7% from the year-ago quarter with digital sales rising 16%. HSN, the namesake operating segment, witnessed sales growth of 5% to $537.4 million, including a 10% increase in digital sales. Meanwhile, sales for the Cornerstone segment climbed 13% to $241.4 million with digital sales surging 22%.

Gross profit grew 9% to $285.5 million, and gross profit margin expanded 70 basis points to 36.7%. Operating income came in at $49.3 million, almost flat with the year-ago quarter.

Earnings estimates climb

Over the past 60 days, the Zacks Consensus Estimate for fiscal 2012 rose 3.9% to $2.64 per share, as both estimates were revised higher. This represents year-over-year growth of 26.7%. The Zacks Consensus Estimate for fiscal 2013 advanced 5.4% to $3.31 per share over the same time frame, as 3 of 4 estimates moved up, reflecting a year-over-year increase of 25.6%.

Valuation stretched, yet lucrative

HSN currently trades at a forward price-to-earning ratio of 20.9, reflecting a 25.9% premium to the peer group average of 16.6. Its price-to-book ratio of 6.5 is substantially higher than the peer group average of 2.2. Given the company's compelling fundamentals, the premium valuation is justified and well supported by its long-term estimated earnings-per-share growth rate of 18.0% versus 13.6% for the peer group.

With respect to return on equity, the stock looks attractive. It has a trailing 12-month ROE of 26.7%, which is significantly above its peer group average of 12.0%. This implies that the company reinvests its earnings more efficiently than its peer group.

Shares of HSN have gained 52.4% in the past year. Currently trading close to its 52-week high, shares have been continually trading above the 200 day moving average since the beginning of calendar 2011 and the 50-day moving average since May 22, 2012. Additionally, the company has outperformed the S&P 500 Index since May 23, 2012.

HSN is an interactive multi-channel retailer, operating under two segments -- the namesake HSN and Cornerstone. The company provides jewelry collections, fashion attire and accessories, beauty products, housewares, electronics products, and other items via HSN television networks,, mobile applications, and brick and mortar stores. Cornerstone offers home related merchandises, apparel and accessories under brands such as Ballard Designs, Chasing Fireflies, Frontgate, Garnet Hill, Grandin Road, Improvements and TravelSmith. HSN currently has a market cap of $2.99 billion.

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