NEW YORK (TheStreet) -- Shares of Aeropostale Inc (ARO) are higher by 3% to $2.06 in late morning trading Friday, after a filing with the SEC revealed that company CEO Julian Geiger purchased shares of the apparel retail company on Thursday.
Geiger bought 250,000 shares of the teen clothing company at a price of $1.92 a piece, for a total investment of $481,093.
This is the first purchase filed by Geiger in the past year.
New York City-based Aeropostale is a mall retailer of casual apparel and accessories for teenagers and younger kids. The company operates 949 Aeropostale stores in the U.S. and Canada.
Separately, TheStreet Ratings team rates AEROPOSTALE INC as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:
"We rate AEROPOSTALE INC (ARO) a SELL. This is driven by multiple weaknesses, 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 high debt management risk, disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio is very high at 2.83 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
- 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. Compared to other companies in the Specialty Retail industry and the overall market, AEROPOSTALE INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for AEROPOSTALE INC is rather low; currently it is at 18.55%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -14.20% is significantly below that of the industry average.
- ARO'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 49.00%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- ARO, with its decline in revenue, underperformed when compared the industry average of 10.4%. Since the same quarter one year prior, revenues fell by 19.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full analysis from the report here: ARO Ratings Report