NEW YORK (TheStreet) -- Tumi Holdings (TUMI) stock is advancing 5.52% to $17.40 on heavy trading volume on Thursday afternoon after the S&P Dow Jones Indices announced it will add the company to the S&P SmallCap 600 index at the end of the trading day on Monday.
S&P Down Jones Indices, a McGraw Hill Financial (MHFI) subsidiary, will replace IPC Healthcare (IPCM) with Tumi after Team Health Holdings (TMH) acquires IPC Healthcare for about $1.6 billion.
Tumi is also set to join the S&P SmallCap 600 GICS (global industry classification standard) apparel, accessories and luxury goods sub-industry index.
The South Plainfield, NJ-based company is a designer, producer and seller of products and accessories for traveling and business.
So far today, 1.86 million shares of Tumi have been traded, compared with its average daily volume of 639,966 shares.
Separately, TheStreet Ratings team rates TUMI HOLDINGS INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
We rate TUMI HOLDINGS INC (TUMI) 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 a generally disappointing performance in the stock itself and disappointing return on equity.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- TUMI's revenue growth trails the industry average of 15.6%. Since the same quarter one year prior, revenues slightly increased by 0.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- TUMI 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 1.43, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for TUMI HOLDINGS INC is rather high; currently it is at 60.54%. Regardless of TUMI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 11.34% trails the industry average.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Textiles, Apparel & Luxury Goods industry and the overall market on the basis of return on equity, TUMI HOLDINGS INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- TUMI has underperformed the S&P 500 Index, declining 23.20% from its price level of one year ago. 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.
- You can view the full analysis from the report here: TUMI
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.