Trade-Ideas: Francescas Holdings (FRAN) Is Today's

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Francescas Holdings ( FRAN) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Francescas Holdings as such a stock due to the following factors:

  • FRAN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $23.2 million.
  • FRAN has traded 1.2 million shares today.
  • FRAN is up 3.1% today.
  • FRAN was down 5.4% yesterday.

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More details on FRAN:

Francesca's Holdings Corporation, through its subsidiary, Francesca's Collections, Inc., operates a chain of retail boutiques. The company offers a selection of fashion apparel, jewelry, accessories, and gifts primarily to its female customers. FRAN has a PE ratio of 16.7. Currently there are 9 analysts that rate Francescas Holdings a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Francescas Holdings has been 1.5 million shares per day over the past 30 days. Francescas has a market cap of $838.2 million and is part of the services sector and retail industry. The stock has a beta of 2.22 and a short float of 26.2% with 6.50 days to cover. Shares are down 26.7% year to date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Francescas Holdings as a hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, robust revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and weak operating cash flow.

Highlights from the ratings report include:
  • FRANCESCAS HOLDINGS CORP has improved earnings per share by 17.9% 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. This trend suggests that the performance of the business is improving. During the past fiscal year, FRANCESCAS HOLDINGS CORP increased its bottom line by earning $1.05 versus $0.52 in the prior year. This year, the market expects an improvement in earnings ($1.14 versus $1.05).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 19.9%. Since the same quarter one year prior, revenues rose by 17.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The gross profit margin for FRANCESCAS HOLDINGS CORP is rather high; currently it is at 56.15%. Regardless of FRAN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, FRAN's net profit margin of 16.32% compares favorably to the industry average.
  • Net operating cash flow has decreased to $8.02 million or 33.89% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • FRAN's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 41.26%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, FRAN is still more expensive than most of the other companies in its industry.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.
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