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Elizabeth Arden (RDEN) Showing Signs Of Perilous Reversal Today

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 Elizabeth Arden ( RDEN) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Elizabeth Arden as such a stock due to the following factors:

  • RDEN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $17.6 million.
  • RDEN has traded 72,701 shares today.
  • RDEN is down 3.2% today.
  • RDEN was up 13.1% yesterday.

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More details on RDEN:

Elizabeth Arden, Inc., a beauty products company, engages in the manufacture, distribution, marketing, and sale of fragrances, skin care, and cosmetic products worldwide. RDEN has a PE ratio of 31.2. Currently there is 1 analyst that rates Elizabeth Arden a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Elizabeth Arden has been 313,500 shares per day over the past 30 days. Elizabeth Arden has a market cap of $945.1 million and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 1.18 and a short float of 8.4% with 3.64 days to cover. Shares are up 1.6% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Elizabeth Arden as a hold. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:

  • Net operating cash flow has increased to $145.89 million or 11.90% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -22.91%.
  • 48.32% is the gross profit margin for ELIZABETH ARDEN INC which we consider to be strong. Regardless of RDEN'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 8.35% trails the industry average.
  • RDEN, with its decline in revenue, slightly underperformed the industry average of 9.8%. Since the same quarter one year prior, revenues fell by 10.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Personal Products industry and the overall market, ELIZABETH ARDEN INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • Looking at the price performance of RDEN's shares over the past 12 months, there is not much good news to report: the stock is down 31.17%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, RDEN is still more expensive than most of the other companies in its industry.

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