Why Bebe Stores (BEBE) Is Spiking Today

NEW YORK (TheStreet) -- Bebe Stores  (BEBE) was rising 18.18% to $5.59 on Friday afternoon after the women's apparel retailer reported a smaller-than-expected loss in its second-quarter results and reported revenue that beat analysts' estimates.

The company noted a loss of seven cents a share on revenue of $130 million, which beat the analysts' expectations of a 14 cent loss per share on revenue of $121.3 million, according to FactSet.

Bebe also reported that same-store sales in establishments open at least a year fell 1.9% in the second quarter compared to a 2.8% drop in the first quarter. This is a critical measure in gauging a retailer's status because it does not include results from stores that recently opened or closed.

"We are encouraged by the sequential improvement we experienced in the second quarter, especially during Black Friday weekend and the month of December," said CEO Steve Birkhold in the company's statement. "December continued the sequential improvement with positive comparable store sales, as we saw a favorable response to the new merchandise and an increase in traffic, despite declining mall traffic and an aggressive promotional environment across the industry."

Must Read: Interesting BEBE Call Options For February 22nd

TheStreet Ratings team rates BEBE STORES INC as a "sell" with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate BEBE STORES INC (BEBE) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Specialty Retail industry. The net income has significantly decreased by 254.6% when compared to the same quarter one year ago, falling from -$2.58 million to -$9.15 million.
  • 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, BEBE STORES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has declined marginally to -$11.22 million or 4.66% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, BEBE STORES INC has marginally lower results.
  • BEBE STORES INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, BEBE STORES INC swung to a loss, reporting -$0.97 versus $0.15 in the prior year. This year, the market expects an improvement in earnings (-$0.48 versus -$0.97).
  • BEBE, with its decline in revenue, slightly underperformed the industry average of 7.3%. Since the same quarter one year prior, revenues slightly dropped by 2.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • You can view the full analysis from the report here: BEBE Ratings Report

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