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.

Trade-Ideas LLC identified Francescas Holdings ( FRAN) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Francescas Holdings as such a stock due to the following factors:

  • FRAN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $14.2 million.
  • FRAN has traded 53,498 shares today.
  • FRAN is up 3.3% today.
  • FRAN was down 5.4% yesterday.

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More details on FRAN:

Francesca's Holdings Corporation, through its subsidiary, Francesca's Collections, Inc., operates a chain of retail boutiques. The company offers a selection of fashion apparel, jewelry, accessories, and gifts primarily for women between the ages of 18 and 35. FRAN has a PE ratio of 19.4. Currently there are 7 analysts that rate Francescas Holdings a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for Francescas Holdings has been 590,700 shares per day over the past 30 days. Francescas has a market cap of $712.3 million and is part of the services sector and retail industry. The stock has a beta of 1.23 and a short float of 17.5% with 5.48 days to cover. Shares are down 4.6% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Francescas Holdings as a buy. 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 expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 13.3%. Since the same quarter one year prior, revenues slightly increased by 9.4%. 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.
  • FRAN 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. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.48, which illustrates the ability to avoid short-term cash problems.
  • The gross profit margin for FRANCESCAS HOLDINGS CORP is rather high; currently it is at 51.21%. Regardless of FRAN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, FRAN's net profit margin of 8.34% compares favorably to the industry average.
  • 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. In comparison to other companies in the Specialty Retail industry and the overall market on the basis of return on equity, FRANCESCAS HOLDINGS CORP has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, FRAN has underperformed the S&P 500 Index, declining 18.26% from its price level of one year ago. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.

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