NEW YORK (TheStreet) -- Shares of Express Inc. (EXPR) are surging, up 26.94% to $17.20 in pre-market trade, as Sycamore Partners said it's interested in acquiring the troubled clothing retailer company, Bloomberg reports.
Sycamore now has a 9.9% stake in Express, and in a letter to the retailer's board said that it would like to conduct due diligence to determine a takeover price.
Though Express responded by adopting a poison-pill defense, Sycamore's interest sent the shares as high as $18 after hours. The stock had closed at $13.55 before the letter was disclosed, giving the Columbus, Ohio-based company a market value of $1.14 billion, Bloomberg said.
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 strongest point has been its expanding profit margins. At the same time, however, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- EXPR, with its decline in revenue, slightly underperformed the industry average of 2.0%. Since the same quarter one year prior, revenues slightly dropped by 9.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 33.48%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 84.21% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- EXPRESS INC 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. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, EXPRESS INC reported lower earnings of $1.38 versus $1.60 in the prior year. For the next year, the market is expecting a contraction of 39.9% in earnings ($0.83 versus $1.38).
- The gross profit margin for EXPRESS INC is currently lower than what is desirable, coming in at 34.05%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.10% trails that of the industry average.
- Net operating cash flow has significantly decreased to -$31.19 million or 681.73% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: EXPR Ratings Report