Aeropostale (ARO): Heavy Pre-Market Activity

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.

Trade-Ideas LLC identified Aeropostale ( ARO) as a pre-market mover with heavy volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Aeropostale as such a stock due to the following factors:

  • ARO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $11.1 million.
  • ARO traded 433,038 shares today in the pre-market hours as of 9:02 AM, representing 14.2% of its average daily volume.

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More details on ARO:

Aeropostale, Inc., together with its subsidiaries, operates as a mall-based specialty retailer of casual apparel and accessories. Currently there are no analysts that rate Aeropostale a buy, 2 analysts rate it a sell, and 20 rate it a hold.

The average volume for Aeropostale has been 3.1 million shares per day over the past 30 days. Aeropostale has a market cap of $253.2 million and is part of the services sector and retail industry. The stock has a beta of 2.57 and a short float of 33.8% with 7.62 days to cover. Shares are down 64.6% year-to-date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Aeropostale as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • 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 Specialty Retail industry. The net income has significantly decreased by 531.0% when compared to the same quarter one year ago, falling from -$12.17 million to -$76.78 million.
  • 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 Specialty Retail industry and the overall market, AEROPOSTALE INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for AEROPOSTALE INC is rather low; currently it is at 21.57%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -19.39% is significantly below that of the industry average.
  • Net operating cash flow has decreased to -$77.61 million or 19.95% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly 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 74.77%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 512.50% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

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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