3 Retail Stocks Nudging The Industry Higher

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.

The three major indices are trading lower today with the Dow Jones Industrial Average ( ^DJI) trading up 20 points (0.1%) at 16,715 as of Tuesday, May 13, 2014, 4:20 PM ET. The NYSE advances/declines ratio sits at 1,363 issues advancing vs. 1,697 declining with 123 unchanged.

The Retail industry as a whole closed the day down 0.5% versus the S&P 500, which was unchanged. Top gainers within the Retail industry included Alon Blue Square Israel ( BSI), up 4.8%, ALCO Stores ( ALCS), up 1.8%, Appliance Recycling Centers Of America ( ARCI), up 1.8%, Village Super Market ( VLGEA), up 4.6% and Pacific Sunwear ( PSUN), up 6.0%.

TheStreet Ratings Group would like to highlight 3 stocks pushing the industry higher today:

Pacific Sunwear ( PSUN) is one of the companies that pushed the Retail industry higher today. Pacific Sunwear was up $0.17 (6.0%) to $3.00 on heavy volume. Throughout the day, 510,291 shares of Pacific Sunwear exchanged hands as compared to its average daily volume of 294,400 shares. The stock ranged in a price between $2.84-$3.03 after having opened the day at $2.84 as compared to the previous trading day's close of $2.83.

Pacific Sunwear of California, Inc., together with its subsidiaries, operates as a specialty retailer in the action sports, fashion, and music influences of the California lifestyle. Pacific Sunwear has a market cap of $187.8 million and is part of the services sector. Shares are down 15.3% year-to-date as of the close of trading on Monday. Currently there are 2 analysts who rate Pacific Sunwear a buy, no analysts rate it a sell, and 5 rate it a hold.

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

TheStreet Ratings rates Pacific Sunwear as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, generally high debt management risk, disappointing return on equity, poor profit margins and weak operating cash flow.

Highlights from TheStreet Ratings analysis on PSUN go as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Specialty Retail industry. The net income has decreased by 13.5% when compared to the same quarter one year ago, dropping from -$19.86 million to -$22.54 million.
  • The debt-to-equity ratio is very high at 4.78 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.24, which clearly demonstrates the inability to cover short-term cash needs.
  • 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, PACIFIC SUNWEAR CALIF INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for PACIFIC SUNWEAR CALIF INC is rather low; currently it is at 22.77%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -10.31% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to $13.39 million or 52.30% 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.

You can view the full analysis from the report here: Pacific Sunwear Ratings Report

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

If you liked this article you might like

Should Investors Fret Over Abercrombie & Fitch's Stock Dip on Earnings Miss?

How Urban Outfitters and American Eagle Keep Teens Hooked

Gap Isn't Doing Enough to Set Itself Apart, Cramer Says

Are Mall Owners Too Nonchalant About Retailing's Future?

Are Mall Owners Too Nonchalant About Retailing's Future?

GameStop Wins Praise for Management Despite Industry Turbulence