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. NEW YORK ( TheStreet) -- Francescas Holdings (Nasdaq: FRAN) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself and weak operating cash flow.
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- 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 34.70%, 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.
- 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 to the industry average, the firm's growth rate is much lower.
- 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, FRANCESCAS HOLDINGS CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Specialty Retail industry average. The net income increased by 15.5% when compared to the same quarter one year prior, going from $12.65 million to $14.62 million.
- 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.