NEW YORK (TheStreet) -- Shares of Zulily (ZU) were gaining 14.7% to $15.25 on heavy trading volume Monday after Alibaba (BABA) increased its stake in the online clothing retailer.

Alibaba owns 11.5 million shares of Zulily as of Friday, May 8, giving the Chinese e-commerce company a 9.2% stake in the company, according to the Wall Street Journal. Before buying more shares in the company last week Alibaba owned just under 7 million shares of Zulily.

Alibaba spent about $56 million buying shares of Zulily last week.

While Alibaba owns a stake in Zulily, the Chinese company has no interest in acquiring the online retailer, according to the Journal.

About 4.8 million shares of Zulily were traded by 9:38 a.m. Monday, above the company's average trading volume of about 3.2 million shares a day.

TheStreet Ratings team rates ZULILY INC as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:

"We rate ZULILY INC (ZU) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, weak operating cash flow and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • ZU's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 63.45%, which is also worse than the performance of the S&P 500 Index. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, ZU is still more expensive than most of the other companies in its industry.
  • Net operating cash flow has significantly decreased to -$19.18 million or 210.16% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The gross profit margin for ZULILY INC is currently lower than what is desirable, coming in at 31.54%. Regardless of ZU's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -0.81% trails the industry average.
  • When compared to other companies in the Internet & Catalog Retail industry and the overall market, ZULILY INC's return on equity is below that of both the industry average and the S&P 500.
  • ZULILY INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ZULILY INC increased its bottom line by earning $0.11 versus $0.08 in the prior year. This year, the market expects an improvement in earnings ($0.25 versus $0.11).
  • You can view the full analysis from the report here: ZU Ratings Report
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