3 Stocks Pushing The Specialty Retail Industry Lower

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 Specialty Retail industry as a whole closed the day up 0.4% versus the S&P 500, which was unchanged. Laggards within the Specialty Retail industry included DGSE Companies ( DGSE), down 3.1%, Lentuo International ( LAS), down 3.8%, Medifast ( MED), down 2.9%, Container Store Group ( TCS), down 4.3% and Barnes & Noble ( BKS), down 2.0%.

TheStreet Ratings Group would like to highlight 3 stocks that pushed the industry lower today:

Container Store Group ( TCS) is one of the companies that pushed the Specialty Retail industry lower today. Container Store Group was down $1.25 (4.3%) to $27.75 on average volume. Throughout the day, 357,710 shares of Container Store Group exchanged hands as compared to its average daily volume of 421,200 shares. The stock ranged in price between $27.53-$29.16 after having opened the day at $29.12 as compared to the previous trading day's close of $29.00.

Container Store Group has a market cap of $1.4 billion and is part of the services sector. Shares are down 37.8% year-to-date as of the close of trading on Friday. Currently there is 1 analyst who rates Container Store Group a buy, 1 analyst rates it a sell, and 6 rate it a hold.

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At the close, Medifast ( MED) was down $0.90 (2.9%) to $30.32 on light volume. Throughout the day, 128,104 shares of Medifast exchanged hands as compared to its average daily volume of 176,200 shares. The stock ranged in price between $30.20-$31.24 after having opened the day at $31.18 as compared to the previous trading day's close of $31.22.

Medifast, Inc. is engaged in the production, distribution, and sale of weight loss and weight management products and other consumable health and diet products. It operates through two segments, Medifast and MWCC and Wholesale. Medifast has a market cap of $404.1 million and is part of the services sector. Shares are up 19.5% year-to-date as of the close of trading on Friday. Currently there are 2 analysts who rate Medifast a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Medifast as a buy. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from TheStreet Ratings analysis on MED go as follows:

  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • MED's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 2.91, which clearly demonstrates the ability to cover short-term cash needs.
  • MEDIFAST INC's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, MEDIFAST INC increased its bottom line by earning $1.74 versus $1.14 in the prior year. This year, the market expects an improvement in earnings ($1.84 versus $1.74).
  • The net income growth from the same quarter one year ago has exceeded that of the Personal Products industry average, but is less than that of the S&P 500. The net income increased by 0.6% when compared to the same quarter one year prior, going from $5.93 million to $5.97 million.

You can view the full analysis from the report here: Medifast Ratings Report

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Lentuo International ( LAS) was another company that pushed the Specialty Retail industry lower today. Lentuo International was down $0.12 (3.8%) to $2.92 on average volume. Throughout the day, 78,096 shares of Lentuo International exchanged hands as compared to its average daily volume of 73,700 shares. The stock ranged in price between $2.87-$3.17 after having opened the day at $3.04 as compared to the previous trading day's close of $3.04.

Lentuo International Inc. operates automobile franchise dealerships in the People's Republic of China. Lentuo International has a market cap of $96.4 million and is part of the services sector. Shares are up 10.6% year-to-date as of the close of trading on Friday.

TheStreet Ratings rates Lentuo International as a hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, generally higher debt management risk and poor profit margins.

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Highlights from TheStreet Ratings analysis on LAS go as follows:

  • LENTUO INTERNATIONAL -ADR 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. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, LENTUO INTERNATIONAL -ADR turned its bottom line around by earning $0.12 versus -$0.03 in the prior year. This year, the market expects an improvement in earnings ($0.34 versus $0.12).
  • 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 83.1% when compared to the same quarter one year prior, rising from -$6.61 million to -$1.12 million.
  • LAS, with its decline in revenue, slightly underperformed the industry average of 1.5%. Since the same quarter one year prior, revenues slightly dropped by 7.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • LAS's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 33.79%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
  • Currently the debt-to-equity ratio of 1.50 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with this, the company manages to maintain a quick ratio of 0.34, which clearly demonstrates the inability to cover short-term cash needs.

You can view the full analysis from the report here: Lentuo International 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.

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