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Trade-Ideas: Ascena Retail Group (ASNA) Is Today's "Barbarian At The Gate" Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Ascena Retail Group ( ASNA) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Ascena Retail Group as such a stock due to the following factors:

  • ASNA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $28.3 million.
  • ASNA has traded 2.1 million shares today.
  • ASNA traded in a range 213.9% of the normal price range with a price range of $0.74.
  • ASNA traded above its daily resistance level (quality: 46 days, meaning that the stock is crossing a resistance level set by the last 46 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock s movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in ASNA with the Ticky from Trade-Ideas. See the FREE profile for ASNA NOW at Trade-Ideas

More details on ASNA:

Ascena Retail Group, Inc., through its subsidiaries, operates as a specialty retailer of apparel for women and tween girls. Its principal retail brands comprise Justice, Lane Bryant, maurices, dressbarn, and Catherines brands. ASNA has a PE ratio of 21.5. Currently there are 3 analysts that rate Ascena Retail Group a buy, 1 analyst rates it a sell, and 3 rate it a hold.

The average volume for Ascena Retail Group has been 1.1 million shares per day over the past 30 days. Ascena Retail Group has a market cap of $2.7 billion and is part of the services sector and retail industry. The stock has a beta of 1.36 and a short float of 6.3% with 4.29 days to cover. Shares are down 7.9% year to date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Ascena Retail Group as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 21.6%. Since the same quarter one year prior, revenues rose by 45.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • ASNA's debt-to-equity ratio is very low at 0.10 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • ASCENA RETAIL GROUP INC's earnings per share declined by 35.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ASCENA RETAIL GROUP INC increased its bottom line by earning $1.09 versus $1.06 in the prior year. This year, the market expects an improvement in earnings ($1.12 versus $1.09).
  • The gross profit margin for ASCENA RETAIL GROUP INC is rather high; currently it is at 57.59%. Regardless of ASNA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.73% trails the industry average.
  • Net operating cash flow has decreased to $59.80 million or 23.91% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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