NEW YORK ( TheStreet) -- Express (NYSE: EXPR) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income and revenue growth. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year. Highlights from the ratings report include:
- EXPRESS INC has improved earnings per share by 20.5% 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. This trend suggests that the performance of the business is improving. During the past fiscal year, EXPRESS INC increased its bottom line by earning $1.58 versus $1.45 in the prior year. This year, the market expects an improvement in earnings ($1.85 versus $1.58).
- The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Specialty Retail industry average. The net income increased by 20.2% when compared to the same quarter one year prior, going from $35.01 million to $42.07 million.
- 41.50% is the gross profit margin for EXPRESS INC which we consider to be strong. Regardless of EXPR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, EXPR's net profit margin of 8.50% compares favorably to the industry average.
- 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, EXPRESS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- EXPR has underperformed the S&P 500 Index, declining 8.39% 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.
-- Written by a member of TheStreet Ratings Staff