3 Retail Stocks Nudging The Industry Higher

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.

Two out of the three major indices traded up today One out of the three major indices traded up today The three major indices are trading lower today with the Dow Jones Industrial Average ( ^DJI) trading down 30.21 points (-0.2%) at 16,882 as of Wednesday, July 30, 2014, 3:55 PM ET. The NYSE advances/declines ratio sits at 1,028 issues advancing vs. 1,986 declining with 144 unchanged.

The Retail industry as a whole closed the day up 0.7% versus the S&P 500, which was up 0.1%. Top gainers within the Retail industry included U S Auto Parts Network ( PRTS), up 2.1%, Fairway Group Holdings ( FWM), up 2.5%, Builders FirstSource ( BLDR), up 2.7%, Pantry ( PTRY), up 13.1% and Citi Trends ( CTRN), up 2.3%.

TheStreet Ratings Group would like to highlight 3 stocks pushing the industry higher today:

Builders FirstSource ( BLDR) is one of the companies that pushed the Retail industry higher today. Builders FirstSource was up $0.16 (2.7%) to $6.24 on heavy volume. Throughout the day, 608,865 shares of Builders FirstSource exchanged hands as compared to its average daily volume of 373,900 shares. The stock ranged in a price between $6.08-$6.25 after having opened the day at $6.12 as compared to the previous trading day's close of $6.07.

Builders FirstSource, Inc. manufactures and supplies structural and related building products for residential new construction primarily in the southern and eastern United States. Builders FirstSource has a market cap of $573.3 million and is part of the services sector. Shares are down 14.9% year-to-date as of the close of trading on Tuesday. Currently there are 3 analysts who rate Builders FirstSource a buy, no analysts rate it a sell, and 2 rate it a hold.

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TheStreet Ratings rates Builders FirstSource as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, generally higher debt management risk and poor profit margins.

Highlights from TheStreet Ratings analysis on BLDR go as follows:

  • The revenue growth came in higher than the industry average of 4.2%. Since the same quarter one year prior, revenues slightly increased by 8.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • BUILDERS FIRSTSOURCE 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, BUILDERS FIRSTSOURCE continued to lose money by earning -$0.44 versus -$0.58 in the prior year. This year, the market expects an improvement in earnings ($0.40 versus -$0.44).
  • The debt-to-equity ratio is very high at 28.11 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, BLDR's quick ratio is somewhat strong at 1.36, demonstrating the ability to handle short-term liquidity needs.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Building Products industry and the overall market, BUILDERS FIRSTSOURCE's return on equity significantly trails that of both the industry average and the S&P 500.

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

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At the close, Fairway Group Holdings ( FWM) was up $0.15 (2.5%) to $6.06 on light volume. Throughout the day, 160,273 shares of Fairway Group Holdings exchanged hands as compared to its average daily volume of 328,000 shares. The stock ranged in a price between $5.79-$6.06 after having opened the day at $5.94 as compared to the previous trading day's close of $5.91.

Fairway Group Holdings Corp., together with its subsidiaries, operates as a food retailer. Fairway Group Holdings has a market cap of $165.1 million and is part of the services sector. Shares are down 67.5% year-to-date as of the close of trading on Tuesday. Currently there are 2 analysts who rate Fairway Group Holdings a buy, 1 analyst rates it a sell, and 4 rate it a hold.

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TheStreet Ratings rates Fairway Group Holdings as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, poor profit margins, generally high debt management risk and feeble growth in its earnings per share.

Highlights from TheStreet Ratings analysis on FWM go as follows:

  • 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 32.2% when compared to the same quarter one year ago, falling from -$6.69 million to -$8.84 million.
  • The gross profit margin for FAIRWAY GROUP HOLDINGS is currently lower than what is desirable, coming in at 32.42%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -4.41% trails that of the industry average.
  • The debt-to-equity ratio is very high at 22.22 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, FWM's quick ratio is somewhat strong at 1.14, demonstrating the ability to handle short-term liquidity needs.
  • FAIRWAY GROUP HOLDINGS's earnings per share declined by 31.3% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, FAIRWAY GROUP HOLDINGS reported poor results of -$1.93 versus -$1.43 in the prior year. This year, the market expects an improvement in earnings (-$0.36 versus -$1.93).
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 78.29%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 31.25% compared to the year-earlier quarter.

You can view the full analysis from the report here: Fairway Group Holdings 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.

U S Auto Parts Network ( PRTS) was another company that pushed the Retail industry higher today. U S Auto Parts Network was up $0.07 (2.1%) to $3.36 on light volume. Throughout the day, 31,136 shares of U S Auto Parts Network exchanged hands as compared to its average daily volume of 125,000 shares. The stock ranged in a price between $3.29-$3.36 after having opened the day at $3.32 as compared to the previous trading day's close of $3.29.

U.S. Auto Parts Network, Inc., together with its subsidiaries, operates as an online retailer of automotive aftermarket parts and accessories primarily in the United States, Canada, and the Philippines. It operates in two segments, Base USAP and AutoMD. U S Auto Parts Network has a market cap of $108.7 million and is part of the services sector. Shares are up 32.7% year-to-date as of the close of trading on Tuesday. Currently there is 1 analyst who rates U S Auto Parts Network a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates U S Auto Parts Network as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and poor profit margins.

Highlights from TheStreet Ratings analysis on PRTS go as follows:

  • Despite currently having a low debt-to-equity ratio of 0.49, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.18 is very low and demonstrates very weak liquidity.
  • The gross profit margin for US AUTO PARTS NETWORK INC is currently lower than what is desirable, coming in at 30.43%. Regardless of PRTS's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 0.29% trails the industry average.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Internet & Catalog Retail industry and the overall market, US AUTO PARTS NETWORK INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 508.06% to $8.14 million when compared to the same quarter last year. In addition, US AUTO PARTS NETWORK INC has also vastly surpassed the industry average cash flow growth rate of -16.40%.
  • This stock has increased by 227.08% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in PRTS do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.

You can view the full analysis from the report here: U S Auto Parts Network 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.

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.

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