Ascena Retail Group (ASNA) Stock Closes Down Ahead of Earnings Release, Jim Cramer Weighs In - TheStreet

NEW YORK (TheStreet) -- Ascena Retail Group (ASNA) - Get Report  shares closed Monday's trading session down 4.47% to $11.33 ahead of the company's first quarter fiscal 2016 financial results due out after the market close on Tuesday. 

Wall Street analysts are estimating the company to earn 29 cents a share on revenue of $1.78 billion. 

In the same period the year prior, the company earned 28 cents a share on revenue of $1.19 billion.

TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio, is watching the specialty retailer, commenting that it will be "one of the few retailers where you're going to get hard numbers about how things are doing."

The company recently acquired Ann Taylor operator Ann (ANN) for almost $2.15 billion in cash and stock. 

This action is likely to give Ascena's results a boost. Specifically it will generate cost synergies and enhance earnings, according to Zacks Equity Research.

Based in Mahwah, NJ, Ascena is a national retailer of shoes, apparel and accessories. It operates nearly 4,000 stores in the U.S. and Canada, and its brands include Dressbarn and Lane Bryant.

Separately, TheStreet Ratings team rates ASCENA RETAIL GROUP INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

We rate ASCENA RETAIL GROUP INC (ASNA) a SELL. This is driven by several 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, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • 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 2159.9% when compared to the same quarter one year ago, falling from $15.70 million to -$323.40 million.
  • 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 Specialty Retail industry and the overall market, ASCENA RETAIL GROUP INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The share price of ASCENA RETAIL GROUP INC has not done very well: it is down 12.66% 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. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • ASCENA RETAIL GROUP INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ASCENA RETAIL GROUP INC swung to a loss, reporting -$1.46 versus $0.84 in the prior year. This year, the market expects an improvement in earnings ($0.78 versus -$1.46).
  • ASNA, with its decline in revenue, slightly underperformed the industry average of 4.5%. Since the same quarter one year prior, revenues slightly dropped by 1.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • You can view the full analysis from the report here: ASNA