Ascena Retail Group (ASNA) In A Perilous Reversal

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 Ascena Retail Group ( ASNA) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Ascena Retail Group as such a stock due to the following factors:

  • ASNA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $21.3 million.
  • ASNA has traded 121,783 shares today.
  • ASNA is down 3.1% today.
  • ASNA was up 5.1% yesterday.

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More details on ASNA:

Ascena Retail Group, Inc., through its subsidiaries, operates as a specialty retailer of apparel for women, and tween girls and boys. It operates through five segments: Justice, Lane Bryant, maurices, dressbarn, and Catherines segments. ASNA has a PE ratio of 14.9. Currently there are 4 analysts that rate Ascena Retail Group a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Ascena Retail Group has been 1.6 million shares per day over the past 30 days. Ascena Retail Group has a market cap of $2.0 billion and is part of the services sector and retail industry. The stock has a beta of 2.33 and a short float of 4.2% with 3.53 days to cover. Shares are down 40.8% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Ascena Retail Group as a hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, 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 a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • ASNA's debt-to-equity ratio is very low at 0.10 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.44 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • 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 47.3% when compared to the same quarter one year ago, falling from $29.80 million to $15.70 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Specialty Retail industry and the overall market, ASCENA RETAIL GROUP INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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