NEW YORK (TheStreet) -- The Jones Group (JNY) was jumping Friday in New York after the global designer said it has agreed to a $1.2 billion takeover by Sycamore Partners. Shares of Jones Group were gaining 4.8% to $14.81.
Privately-held Sycamore Partners will pay $15 per share of the apparel company. The deal is expected to close by the second quarter of 2014. Jones Group will hold a special meeting for a shareholder vote to approve the acquisition. If the acquisition is approved Jones Group will become a private company.
Jones Group has been looking into a sale since July when it reportedly hired Citigroup C to explore a possible sale
TheStreet Ratings team rates JONES GROUP INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
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"We rate JONES GROUP INC (JNY) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and generally higher debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Textiles, Apparel & Luxury Goods industry. The net income increased by 68.4% when compared to the same quarter one year prior, rising from $17.40 million to $29.30 million.
- The strong earnings growth this company has enjoyed -- up -- has apparently played a role in driving up its share price by a solid 28.76%. In addition, the rise in the general market has likely contributed to this stock's strong performance during this past year.Although JNY had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
- JONES GROUP INC reported significant earnings per share improvement 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, JONES GROUP INC swung to a loss, reporting -$0.74 versus $0.58 in the prior year. This year, the market expects an improvement in earnings ($0.77 versus -$0.74).
- The debt-to-equity ratio of 1.01 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, JNY's quick ratio is somewhat strong at 1.00, demonstrating the ability to handle short-term liquidity needs.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Textiles, Apparel & Luxury Goods industry and the overall market, JONES GROUP INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: JNY Ratings Report