Rue21 Inc. Stock Upgraded (RUE)

NEW YORK ( TheStreet) -- rue21 (Nasdaq: RUE) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, reasonable valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 1.5%. Since the same quarter one year prior, revenues rose by 18.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • RUE21 INC has improved earnings per share by 20.7% 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 year. We feel that this trend should continue. During the past fiscal year, RUE21 INC increased its bottom line by earning $1.22 versus $0.57 in the prior year. This year, the market expects an improvement in earnings ($1.53 versus $1.22).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Specialty Retail industry average. The net income increased by 22.4% when compared to the same quarter one year prior, going from $7.14 million to $8.74 million.
  • 36.70% is the gross profit margin for RUE21 INC 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 4.50% trails the industry average.
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rue21, inc. operates as a specialty apparel retailer in the United States. It offers an assortment of fashion apparel and accessories for girls and guys, including graphic T-shirts, denim, dresses, shirts, hoodies, belts, jewelry, handbags, footwear, intimate apparel, and other accessories. The company has a P/E ratio of 17.6, below the average retail industry P/E ratio of 24.1 and equal to the S&P 500 P/E ratio of 17.7. Rue21 has a market cap of $612.8 million and is part of the services sector and retail industry. Shares are up 22.2% year to date as of the close of trading on Friday.

You can view the full rue21 Ratings Report or get investment ideas from our investment research center.
-- Written by a member of TheStreet RatingsStaff
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