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TheStreet Open House

Why Bebe Stores (BEBE) Stock Is Up Today

Stocks in this article: BEBE

NEW YORK (TheStreet) -- Bebe Stores (BEBE) shares are up 11.6% to $6.49 in trading on Monday.

The bump follows the clothing retailer's shares being upgraded to "buy" from "neutral" by analysts at Janney Capital.

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The firm raised the stock's price target to $7.50 from $5.50.

The jump can also be attributed to Monday morning's news that retail sales in March saw their biggest gain in 18 months. The 1.1% gain eclipsed analysts estimate of 0.8% gain for the month.

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Separately, TheStreet Ratings team rates BEBE STORES INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate BEBE STORES INC (BEBE) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Specialty Retail industry. The net income has decreased by 13.4% when compared to the same quarter one year ago, dropping from -$4.82 million to -$5.47 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Specialty Retail industry and the overall market, BEBE STORES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $5.98 million or 22.25% 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.
  • BEBE STORES INC's earnings per share declined by 16.7% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, BEBE STORES INC swung to a loss, reporting -$0.97 versus $0.15 in the prior year. This year, the market expects an improvement in earnings (-$0.40 versus -$0.97).
  • 37.46% is the gross profit margin for BEBE STORES INC which we consider to be strong. Regardless of BEBE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BEBE's net profit margin of -4.20% significantly underperformed when compared to the industry average.
  • You can view the full analysis from the report here: BEBE Ratings Report
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