Why Crumbs Bake Shop (CRMB) Stock Is Through The Roof Today

NEW YORK (TheStreet) -- Crumbs Bake Shop (CRMB) shares are skyrocketing up 1488.7% to 44 cents on Thursday following reports that an investment group led by Camping World CEO and host of the CNBC show "The Profit" Marcus Lemonis is putting together a financing and acquisition deal for the company.

The Nasdaq suspended trading of the stock on July 1 due to its failure to comply with a minimum stock holder equity requirement and on Monday the company announced that it was closing all of its stores. 

The chain has posted $28.5 million in losses over the past two years due in part to competition from other high end cupcake stores.

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"We're pleased to be in talks with various interested parties that are allowing us to pursue all of our options for the business, which includes consideration of restructuring alternatives," said Crumbs CEO Edward Slezak.

TheStreet Ratings team rates CRUMBS BAKE SHOP INC as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:

"We rate CRUMBS BAKE SHOP INC (CRMB) a SELL. This is driven by multiple weaknesses, 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 feeble growth in its earnings per share, deteriorating net income, weak operating cash flow and generally disappointing historical performance in the stock itself."

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

  • CRUMBS BAKE SHOP 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. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, CRUMBS BAKE SHOP INC reported poor results of -$1.31 versus -$0.91 in the prior year.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Food & Staples Retailing industry. The net income has significantly decreased by 92.2% when compared to the same quarter one year ago, falling from -$1.98 million to -$3.80 million.
  • Net operating cash flow has significantly decreased to -$3.63 million or 156.85% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 75.79%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 94.11% 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.
  • CRMB, with its decline in revenue, underperformed when compared the industry average of 5.5%. Since the same quarter one year prior, revenues fell by 24.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • You can view the full analysis from the report here: CRMB Ratings Report
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