NEW YORK (TheStreet) -- Cato (CATO) - Get Cato Corporation Class A Report is down big following the release of its fourth quarter earnings report for the fiscal year ending Feb. 1, 2014. Cato shares were down 12.13% and trading at $26.42 on Thursday. 

For the fourth quarter the women's fashion retailer reported a net income of $3.8 million or 13 cents a share. That number does not compare well to the $7.9 million or 27 cents a share it reported in the fourth quarter 2012. Net income and earnings per diluted share were down 52% between those two time periods.

Total sales for the company during the 2013 fourth quarter were $215.2 million, a 7% decrase from the $232 million it brought in for the quarter ending Feb. 2, 2013 while same store sales decreased 3% in that time period. For the fiscal year total sales were down 1% while same store sales were down 3%.

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TheStreet Recommends

TheStreet Ratings team rates CATO CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate CATO CORP (CATO) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. 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, reasonable valuation levels, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

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

  • CATO's revenue growth has slightly outpaced the industry average of 7.3%. Since the same quarter one year prior, revenues slightly increased by 0.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • CATO 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. To add to this, CATO has a quick ratio of 1.83, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has significantly increased by 139.77% to $1.25 million when compared to the same quarter last year. In addition, CATO CORP has also vastly surpassed the industry average cash flow growth rate of -19.02%.
  • 35.94% is the gross profit margin for CATO CORP which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 2.42% trails the industry average.
  • You can view the full analysis from the report here: CATO Ratings Report

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