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Zale Corporation (ZLC) Moving On Heavy Pre-Market Trading

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 Zale Corporation ( ZLC) as a pre-market mover with heavy volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Zale Corporation as such a stock due to the following factors:

  • ZLC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $14.5 million.
  • ZLC traded 1.6 million shares today in the pre-market hours as of 8:03 AM, representing 236.9% of its average daily volume.

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More details on ZLC:

Zale Corporation, together with its subsidiaries, operates as a specialty retailer of fine jewelry in North America. The company operates through three segments: Fine Jewelry, Kiosk Jewelry, and All Other. ZLC has a PE ratio of 53.0. Currently there are 2 analysts that rate Zale Corporation a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Zale Corporation has been 831,600 shares per day over the past 30 days. Zale has a market cap of $501.6 million and is part of the services sector and specialty retail industry. The stock has a beta of 1.93 and a short float of 13.7% with 6.38 days to cover. Shares are down 4.1% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Zale Corporation as a hold. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and weak operating cash flow.

Highlights from the ratings report include:

  • ZALE CORP has improved earnings per share by 5.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, ZALE CORP turned its bottom line around by earning $0.02 versus -$0.96 in the prior year. This year, the market expects an improvement in earnings ($0.50 versus $0.02).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 6.8%. Since the same quarter one year prior, revenues slightly increased by 1.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The gross profit margin for ZALE CORP is rather high; currently it is at 53.44%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -7.53% is in-line with the industry average.
  • The debt-to-equity ratio is very high at 3.31 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
  • Net operating cash flow has decreased to -$86.95 million or 20.08% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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