NEW YORK (
-- Chico's FAS
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, revenue growth, expanding profit margins, impressive record of earnings per share growth and compelling growth in net income. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Highlights from the ratings report include:
- The gross profit margin for CHICOS FAS INC is rather high; currently it is at 63.60%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 8.50% is above that of the industry average.
- The net income growth from the same quarter one year ago has significantly exceeded that of the Specialty Retail industry average, but is less than that of the S&P 500. The net income increased by 29.7% when compared to the same quarter one year prior, rising from $35.40 million to $45.92 million.
- CHICOS FAS INC has improved earnings per share by 30.0% 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 two years. We feel that this trend should continue. During the past fiscal year, CHICOS FAS INC increased its bottom line by earning $0.65 versus $0.39 in the prior year. This year, the market expects an improvement in earnings ($0.85 versus $0.65).
- The revenue growth came in higher than the industry average of 13.2%. Since the same quarter one year prior, revenues rose by 11.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Despite the fact that CHS's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.12 is high and demonstrates strong liquidity.
Chico's FAS, Inc., together with its subsidiaries, operates as a specialty retailer of casual-to-dressy clothing, intimates, complementary accessories, and other non-clothing gift items. The company has a P/E ratio of 23.8, equal to the average retail industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Chico's FAS has a market cap of $2.7 billion and is part of the
industry. Shares are up 20% year to date as of the close of trading on Thursday.
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