Lands' End (LE) 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.

Trade-Ideas LLC identified Lands' End ( LE) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Lands' End as such a stock due to the following factors:

  • LE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $15.8 million.
  • LE has traded 86,883 shares today.
  • LE is down 3% today.
  • LE was up 5.7% yesterday.

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More details on LE:

Lands' End, Inc. operates as a multi-channel retailer in the United States and internationally. The company operates through two segments, Direct and Retail. It offers casual clothing, accessories, footwear, and home products. LE has a PE ratio of 12. Currently there is 1 analyst that rates Lands' End a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Lands' End has been 410,800 shares per day over the past 30 days. Lands' End has a market cap of $768.2 million and is part of the services sector and retail industry. Shares are down 55.5% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Lands' End as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, weak operating cash flow, generally high debt management risk, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • 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 Internet & Catalog Retail industry. The net income has significantly decreased by 84.1% when compared to the same quarter one year ago, falling from $10.87 million to $1.72 million.
  • Net operating cash flow has significantly decreased to -$31.49 million or 200.35% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 27.00%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 85.29% compared to the year-earlier 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.
  • The debt-to-equity ratio of 1.25 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, LE's quick ratio is somewhat strong at 1.11, demonstrating the ability to handle short-term liquidity needs.
  • LANDS' END INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, LANDS' END INC increased its bottom line by earning $2.30 versus $1.44 in the prior year. For the next year, the market is expecting a contraction of 36.5% in earnings ($1.46 versus $2.30).

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