Limited Brands Inc. Stock Hold Recommendation Reiterated (LTD)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Limited Brands (NYSE: LTD) has been reiterated by TheStreet Ratings as a hold with a ratings score of C+ . The company's strengths can be seen in multiple areas, such as its expanding profit margins and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and weak operating cash flow.

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Highlights from the ratings report include:
  • 45.60% is the gross profit margin for LIMITED BRANDS 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 3.57% trails the industry average.
  • LIMITED BRANDS INC's earnings per share declined by 19.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, LIMITED BRANDS INC increased its bottom line by earning $2.71 versus $2.42 in the prior year. This year, the market expects an improvement in earnings ($2.88 versus $2.71).
  • LTD, with its decline in revenue, underperformed when compared the industry average of 24.1%. Since the same quarter one year prior, revenues slightly dropped by 5.7%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Net operating cash flow has declined marginally to -$130.00 million or 0.77% when compared to the same quarter last year. Despite a decrease in cash flow LIMITED BRANDS INC is still fairing well by exceeding its industry average cash flow growth rate of -10.95%.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Specialty Retail industry average. The net income has decreased by 22.2% when compared to the same quarter one year ago, dropping from $94.28 million to $73.36 million.

Limited Brands, Inc. operates as a specialty retailer of women's intimate and other apparel, beauty, and personal care products and accessories primarily in the United States and Canada. Limited has a market cap of $13.17 billion and is part of the services sector and retail industry. The company has a P/E ratio of 19.9, above the S&P 500 P/E ratio of 17.7. Shares are down 2.9% year to date as of the close of trading on Friday.

You can view the full Limited Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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