NEW YORK (TheStreet) -- Ann Inc. (ANN) is once more being urged to contemplate a sale to a private equity firm or another apparel company by the hedge funds Red Alder LLC and Engine Capital, Reuters reports.
The hedge funds believe if Ann were to be purchased by a retailer like Chico's FAS Inc. (CHS) , Ascena Retail Group (ASNA) , or J. Crew, it would bring a price of between $60 and $65 per share, Reuters noted.
If the company, which sells women's clothing, accessories, and shoes under its Ann Taylor and LOFT brands, were to be sold to a private equity firm, the price would likely be between $50 and $55 per share.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
Red Alder and Engine Capital own over 1% of Ann stock and said they spoke with a number of shareholders, all of whom agree with their assessment that Ann conduct a strategic alternate review, Reuters added.
"The consensus is that the status quo is not sustainable and that exploring a sale makes sense," the two hedge funds said at an investor presentation on Monday, Reuters reports.
Shares of Ann are up 0.51% to $41.03 at the start of trading on Monday.
Separately, 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 a number of strengths, 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, 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 0.3%. 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 a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. 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 56.57%. 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).
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Specialty Retail industry and the overall market on the basis of return on equity, ANN INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- You can view the full analysis from the report here: ANN Ratings Report
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