NEW YORK (

TheStreet

)

-- Aeropostale

(NYSE:

ARO

) has been downgraded by TheStreet Ratings from buy to hold. 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 notable return on equity. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, poor profit margins and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • The gross profit margin for AEROPOSTALE INC is currently lower than what is desirable, coming in at 29.10%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 3.50% trails that of the industry average.
  • 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 Specialty Retail industry. The net income has significantly decreased by 63.9% when compared to the same quarter one year ago, falling from $45.38 million to $16.37 million.
  • Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.81 is weak.
  • The revenue growth came in higher than the industry average of 13.2%. Since the same quarter one year prior, revenues slightly increased by 1.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.

Aeropostale, Inc. operates as a mall-based specialty retailer of casual apparel and accessories. It designs, markets, and sells merchandise principally targeting 14 to 17 year-old young women and men. The company has a P/E ratio of 8.1, below the average retail industry P/E ratio of 8.3 and below the S&P 500 P/E ratio of 17.7. Aeropostale has a market cap of $1.5 billion and is part of the

services

sector and

retail

industry. Shares are down 25.6% year to date as of the close of trading on Wednesday.

You can view the full

Aeropostale Ratings Report

or get investment ideas from our

investment research center

.

null