The firm said it raised its rating on the clothing and accessories retailer based on the possibility of unlocking further value from the company's deal with Sycamore Partners.
Sycamore bought a 9.9% stake in Express on Thursday, June 12 and also mentioned its interest in acquiring the rest of the company, the New York Times reported.
Separately, TheStreet Ratings team rates EXPRESS INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate EXPRESS INC (EXPR) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The current debt-to-equity ratio, 0.41, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.02, which illustrates the ability to avoid short-term cash problems.
- EXPR, with its decline in revenue, slightly underperformed the industry average of 2.1%. Since the same quarter one year prior, revenues slightly dropped by 9.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The gross profit margin for EXPRESS INC is currently lower than what is desirable, coming in at 34.05%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.10% trails that of the industry average.
- Net operating cash flow has significantly decreased to -$31.19 million or 681.73% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: EXPR Ratings Report