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3 Stocks Pushing The Retail Industry Lower

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

The Retail industry as a whole closed the day up 0.2% versus the S&P 500, which was up 0.3%. Laggards within the Retail industry included Cache ( CACH), down 5.0%, Stein Mart ( SMRT), down 5.7%, Fairway Group Holdings ( FWM), down 1.8%, Sears Hometown & Outlet Stores ( SHOS), down 1.5% and Kirkland's ( KIRK), down 8.8%.

TheStreet Ratings Group would like to highlight 3 stocks that pushed the industry lower today:

Fairway Group Holdings ( FWM) is one of the companies that pushed the Retail industry lower today. Fairway Group Holdings was down $0.08 (1.8%) to $4.36 on heavy volume. Throughout the day, 580,329 shares of Fairway Group Holdings exchanged hands as compared to its average daily volume of 338,600 shares. The stock ranged in price between $4.26-$4.44 after having opened the day at $4.42 as compared to the previous trading day's close of $4.44.

Fairway Group Holdings Corp., together with its subsidiaries, operates as a food retailer. Fairway Group Holdings has a market cap of $133.0 million and is part of the services sector. Shares are down 75.5% year-to-date as of the close of trading on Wednesday. Currently there is 1 analyst who rates Fairway Group Holdings a buy, 1 analyst rates it a sell, and 5 rate it a hold.

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TheStreet Ratings rates Fairway Group Holdings as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on FWM go as follows:

  • The debt-to-equity ratio is very high at 54.53 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, FWM maintains a poor quick ratio of 0.96, which illustrates the inability to avoid short-term cash problems.
  • 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 Food & Staples Retailing industry and the overall market, FAIRWAY GROUP HOLDINGS's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for FAIRWAY GROUP HOLDINGS is currently lower than what is desirable, coming in at 30.97%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -4.88% trails that of the industry average.
  • FWM's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 79.77%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
  • FAIRWAY GROUP HOLDINGS reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, FAIRWAY GROUP HOLDINGS reported poor results of -$1.93 versus -$1.43 in the prior year. This year, the market expects an improvement in earnings (-$0.56 versus -$1.93).

You can view the full analysis from the report here: Fairway Group Holdings Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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