NEW YORK (TheStreet) -- Quiksilver (ZQK) stock closed higher on Friday following the disclosure of insider buys from two top executives and after UBS voiced its support for the company in a research note.
In a SEC filing, Quiksilver CEO Andrew Mooney disclosed he had purchased 100,000 shares of common stock for $3.40 a share, while CFO Richard Shields purchased 100,000 shares of common stock at a median price of $3.37 a share.
In a note to investors Friday, UBS said that Quiksilver is still a top-pick on its M&A list. The firm said that Quiksilver's relationship with VF Corp (VFC - Get Report) could give it an advantage to turn around.
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TheStreet Ratings team rates QUIKSILVER INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate QUIKSILVER INC (ZQK) a SELL. This is driven by some concerns, 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 disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and generally high debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 Textiles, Apparel & Luxury Goods industry and the overall market, QUIKSILVER INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$11.31 million or 148.51% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- ZQK has underperformed the S&P 500 Index, declining 22.06% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- The debt-to-equity ratio is very high at 2.35 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, ZQK's quick ratio is somewhat strong at 1.45, demonstrating the ability to handle short-term liquidity needs.
- ZQK, with its decline in revenue, underperformed when compared the industry average of 16.8%. Since the same quarter one year prior, revenues slightly dropped by 4.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full analysis from the report here: ZQK Ratings Report