Why Express (EXPR) Stock Is Tanking In Pre-Market Trading Friday

NEW YORK (TheStreet) -- Shares of Express Inc. (EXPR) are down -11.96% to $12 in pre-market trading on Friday after UBS cut its price target on the stock to $13 from $17.

The firm said it lowered its price target on the apparel and accessories retailer following the company's 2014 first quarter results, which showed a drop in net sales and net earnings. For the most recent quarter, Express posted a 10% decline in net sales to $460.7 million, compared to $509.4 million from the 2013 first quarter.

The company reported a net income of $5.1 million, or 6 cents per diluted share versus a net income of $32.4 million, or 38 cents per diluted share from the year ago quarter.

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Separately, TheStreet Ratings team rates EXPRESS INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate EXPRESS INC (EXPR) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and notable return on equity. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and poor profit margins."

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

  • The current debt-to-equity ratio, 0.42, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.10, which illustrates the ability to avoid short-term cash problems.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 3.4%. Since the same quarter one year prior, revenues slightly dropped by 2.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for EXPRESS INC is currently lower than what is desirable, coming in at 34.49%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 6.69% trails that of the industry average.
  • Net operating cash flow has decreased to $157.44 million or 12.64% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, EXPRESS INC has marginally lower results.
  • You can view the full analysis from the report here: EXPR Ratings Report
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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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