NEW YORK (TheStreet) -- Chico's FAS (CHS) stock is lower by -1.59% to $15.43 in early market trading after the retailer was downgraded to "hold" from "buy" at Maxim Financial with a price target of $14.50, down from $19.
The firm cited lack of comp momentum for its cut in rating.
Separately, TheStreet Ratings team rates CHICOS FAS INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate CHICOS FAS INC (CHS) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and relatively poor performance when compared with the S&P 500 during the past year."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- CHS's revenue growth has slightly outpaced the industry average of 0.5%. Since the same quarter one year prior, revenues slightly increased by 3.3%. 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.
- CHS has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign.
- Net operating cash flow has slightly increased to $85.67 million or 7.07% when compared to the same quarter last year. Despite an increase in cash flow, CHICOS FAS INC's cash flow growth rate is still lower than the industry average growth rate of 21.80%.
- 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 30.9% when compared to the same quarter one year ago, falling from $43.59 million to $30.13 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, CHICOS FAS INC'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: CHS Ratings Report
EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he and Stephanie Link think could be potentially HUGE winners. Click here to see the holdings for FREE.