Why Bebe Stores (BEBE) Stock Is Plummeting On Monday

NEW YORK (TheStreet) -- Shares of Bebe Stores Inc. (BEBE) are tanking -16.32% to $3.41 on Monday following news CEO Steve Birkhold sold 140,980 shares of the stock at a price of $4.07 per share.

The transaction was dated Thursday May 29 and the stock was sold for a total of $573,788.60.

The Secretary, Senior VP and General Counsel at Bebe Stores, a women's apparel and accessories chain, also sold a total of 1,586 shares in a deal dated May 28, for $4.09 per share, Emerging Markets reported.

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Separately, 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 a number of negative factors, 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 disappointing return on equity, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself."

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

  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. 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.
  • The gross profit margin for BEBE STORES INC is currently lower than what is desirable, coming in at 32.54%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -25.97% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$19.86 million or 97.75% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • BEBE has underperformed the S&P 500 Index, declining 23.64% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • BEBE, with its decline in revenue, underperformed when compared the industry average of 3.6%. Since the same quarter one year prior, revenues fell by 17.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • You can view the full analysis from the report here: BEBE Ratings Report
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