The firm said it lowered its rating on the footwear and accessories retailer as it believes DSW will continue to lower its guidance.
Shares of DSW are down -0.85% to $27.16 in pre-market trading today.
Separately, TheStreet Ratings team rates DSW INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate DSW INC (DSW) 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 revenue growth, 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 poor profit margins, weak operating cash flow and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- DSW's revenue growth has slightly outpaced the industry average of 0.6%. Since the same quarter one year prior, revenues slightly increased by 0.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- DSW has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.26, which illustrates the ability to avoid short-term cash problems.
- DSW INC has improved earnings per share by 12.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, DSW INC increased its bottom line by earning $1.64 versus $1.60 in the prior year. For the next year, the market is expecting a contraction of 5.5% in earnings ($1.55 versus $1.64).
- The gross profit margin for DSW INC is currently lower than what is desirable, coming in at 34.12%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 6.45% trails that of the industry average.
- Net operating cash flow has significantly decreased to $14.54 million or 65.64% 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: DSW Ratings Report