Why Pep Boys (PBY) Stock Is Gaining Today

NEW YORK (TheStreet) -- Pep Boys (PBY) shares are up 6% to $11.15 on Tuesday, continuing the momentum it gained in after-hours trading on Monday following the release of the company's first quarter earnings results.

Shares are up after the company said that it expects to have a prosperous second quarter despite a first quarter in which the car care company reported earnings of 3 cents per diluted share, 2 cents worse than analysts expectations, and revenue of $538.8 million, also below Wall Street's $541.6 estimates.

The company stated that they expect sales trends to improve in the second half of the year while reporting that its service business has improved during the first five weeks of the current quarter.

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TheStreet Ratings team rates PEP BOYS-MANNY MOE & JACK as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate PEP BOYS-MANNY MOE & JACK (PBY) 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 increase in net income, good cash flow from operations and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and poor profit margins."

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

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Specialty Retail industry. The net income increased by 77.1% when compared to the same quarter one year prior, rising from -$14.54 million to -$3.33 million.
  • Net operating cash flow has significantly increased by 87.56% to -$3.45 million when compared to the same quarter last year. In addition, PEP BOYS-MANNY MOE & JACK has also vastly surpassed the industry average cash flow growth rate of -15.13%.
  • The current debt-to-equity ratio, 0.37, is low and is below the industry average, implying that there has been successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.17 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Specialty Retail industry and the overall market, PEP BOYS-MANNY MOE & JACK's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for PEP BOYS-MANNY MOE & JACK is rather low; currently it is at 24.71%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -0.67% trails that of the industry average.
  • You can view the full analysis from the report here: PBY Ratings Report
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