NEW YORK (TheStreet) -- Shares of Ann Inc. (ANN) are down 1.13% to $40.36 in mid-afternoon trading on Monday, after the women's apparel company, which sells merchandise under its Ann Taylor and LOFT brands, responded to hedges funds Red Alder LLC and Engine Capital's request the company consider selling itself to another apparel company or a private equity firm.
The company said its board welcomes input from shareholders and that it has reviewed the suggestions made by the hedge funds this morning.
Ann said its board will continue to "consider and determine the courses of action that are in the best interests of all its shareholders," but did not elaborate further.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 said they believe that if another apparel company were to make a bid for Ann Inc. the company could bring a price between $60 and $65 per share, while a private equity firm could offer a price of $50 to $55 per share, Reuters reports.
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 some important positives, 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 0.1%. 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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