NEW YORK (TheStreet) -- Shares of Ann Inc. (ANN) are down -1.46% to $41.26 a day after it was reported that the company may be for sale, but it's not clear how many suitors will come knocking, the New York Post reports.
Shares of the company jumped about 5% yesterday after Reuters said the company had hired JPMorgan Chase (JPM) to explore a potential sale.
Insiders say an auction would likely attract buyout funds, including TPG, Leonard Green & Partners, and possibly Golden Gate Capital, which earlier this year disclosed a 9.5% stake in Ann, calling the shares undervalued, the Post said.
TheStreet Ratings team rates ANN INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate ANN INC (ANN) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, increase in stock price during the past year and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- ANN's revenue growth has slightly outpaced the industry average of 0.5%. Since the same quarter one year prior, revenues slightly increased by 1.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. 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.
- The gross profit margin for ANN INC is rather high; currently it is at 52.35%. Regardless of ANN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.03% trails the industry average.
- ANN INC's earnings per share declined by 7.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, ANN INC increased its bottom line by earning $2.19 versus $2.10 in the prior year. For the next year, the market is expecting a contraction of 8.7% in earnings ($2.00 versus $2.19).
- You can view the full analysis from the report here: ANN Ratings Report