NEW YORK (TheStreet) -- After ending Friday higher, Quiksilver (ZQK - Get Report) stock is extending gains through to Monday. The company began to recover from post-earnings falls following the disclosure of insider buys from two top executives and after UBS voiced its support for the company in a research note.
By late afternoon, shares had added 5% to $3.87, contributing to a 9.9% gain over Friday's session.
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. Meanwhile, 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.
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 a number of negative factors, 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, generally high debt management risk, generally disappointing historical performance in the stock itself 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 when compared to that of the S&P 500 and the Textiles, Apparel & Luxury Goods industry. The net income has significantly decreased by 63.8% when compared to the same quarter one year ago, falling from -$32.40 million to -$53.07 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 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.
- The debt-to-equity ratio is very high at 2.72 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Regardless of the company's weak debt-to-equity ratio, ZQK has managed to keep a strong quick ratio of 1.66, which demonstrates the ability to cover short-term cash needs.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 54.36%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 35.00% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- QUIKSILVER INC's earnings per share declined by 35.0% 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, QUIKSILVER INC reported poor results of -$1.43 versus -$0.08 in the prior year. This year, the market expects an improvement in earnings (-$0.20 versus -$1.43).
- You can view the full analysis from the report here: ZQK Ratings Report