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.

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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

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At the close, Village Super Market ( VLGEA) was up $1.13 (4.6%) to $25.69 on average volume. Throughout the day, 23,240 shares of Village Super Market exchanged hands as compared to its average daily volume of 19,800 shares. The stock ranged in a price between $24.43-$25.83 after having opened the day at $24.55 as compared to the previous trading day's close of $24.56.

Village Super Market, Inc., together with its subsidiaries, operates a chain of supermarkets in the United States. Village Super Market has a market cap of $224.3 million and is part of the services sector. Shares are down 20.8% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate Village Super Market a buy, no analysts rate it a sell, and none 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 Village Super Market as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations 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, feeble growth in the company's earnings per share and deteriorating net income.

Highlights from TheStreet Ratings analysis on VLGEA go as follows:

  • VLGEA's revenue growth has slightly outpaced the industry average of 5.1%. Since the same quarter one year prior, revenues slightly increased by 2.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $33.30 million or 46.49% when compared to the same quarter last year. In addition, VILLAGE SUPER MARKET has also vastly surpassed the industry average cash flow growth rate of -3.94%.
  • VLGEA's debt-to-equity ratio is very low at 0.18 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.99 is somewhat weak and could be cause for future problems.
  • VILLAGE SUPER MARKET 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 suffered a declining pattern earnings per share over the past two years. During the past fiscal year, VILLAGE SUPER MARKET reported lower earnings of $1.84 versus $2.27 in the prior year.
  • 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 Food & Staples Retailing industry. The net income has significantly decreased by 69.0% when compared to the same quarter one year ago, falling from $9.10 million to $2.82 million.

You can view the full analysis from the report here: Village Super Market 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.

Appliance Recycling Centers Of America ( ARCI) was another company that pushed the Retail industry higher today. Appliance Recycling Centers Of America was up $0.06 (1.8%) to $3.45 on average volume. Throughout the day, 53,562 shares of Appliance Recycling Centers Of America exchanged hands as compared to its average daily volume of 40,100 shares. The stock ranged in a price between $3.40-$3.53 after having opened the day at $3.51 as compared to the previous trading day's close of $3.39.

Appliance Recycling Centers of America, Inc., together with its subsidiaries, sells new household appliances through a chain of company-owned retail stores under the ApplianceSmart name. The company operates in two segments, Recycling and Retail. Appliance Recycling Centers Of America has a market cap of $18.8 million and is part of the services sector. Shares are up 18.1% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate Appliance Recycling Centers Of America a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates Appliance Recycling Centers Of America as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and notable return on equity. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

Highlights from TheStreet Ratings analysis on ARCI go as follows:

  • The revenue growth came in higher than the industry average of 5.3%. Since the same quarter one year prior, revenues rose by 10.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 466.66% and other important driving factors, this stock has surged by 102.92% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • APPLIANCE RECYCLING CTR AMER reported significant earnings per share improvement 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. During the past fiscal year, APPLIANCE RECYCLING CTR AMER turned its bottom line around by earning $0.57 versus -$0.69 in the prior year.
  • ARCI's debt-to-equity ratio of 0.92 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.70 is weak.
  • The gross profit margin for APPLIANCE RECYCLING CTR AMER is currently lower than what is desirable, coming in at 28.20%. Regardless of ARCI's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.89% trails the industry average.

You can view the full analysis from the report here: Appliance Recycling Centers Of America 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.

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.

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