NEW YORK (TheStreet) -- Shares of Alco Stores Inc. (ALCS) are down -2.88% to $8.10 in after-hours trading on Wednesday after the company released its fiscal 2015 first quarter financial results reporting a 4.1% decrease in net sales to $104.7 million, compared to $109.2 million from the same period in 2014.
The company, which is a general merchandise retailer, posted a net loss of $8.1 million, or $2.49 per diluted share, versus a net loss of $1.7 million, or 51 cents per diluted share for the year ago quarter.
"We rate ALCO STORES INC (ALCS) a SELL. This is driven by multiple 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, generally high debt management risk, disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
Separately, TheStreet Ratings team rates ALCO STORES INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
- 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 Multiline Retail industry. The net income has significantly decreased by 1111.6% when compared to the same quarter one year ago, falling from -$1.37 million to -$16.64 million.
- The debt-to-equity ratio of 1.11 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.18, which clearly demonstrates the inability to cover short-term cash needs.
- 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 Multiline Retail industry and the overall market, ALCO STORES INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for ALCO STORES INC is currently lower than what is desirable, coming in at 26.18%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -15.59% is significantly below that of the industry average.
- The share price of ALCO STORES INC has not done very well: it is down 12.21% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- You can view the full analysis from the report here: ALCS Ratings Report