NEW YORK (TheStreet) -- Shares of Abercrombie & Fitch (ANF) were sliding, lower by 3.03% to $21.47 in early market trading Tuesday, after analysts at FBR Capital issued a negative note on the teen apparel retailer this morning.
FBR downgraded the company to "market perform" from "outperform" while maintaining a $24 price target.
The firm noted that a brand turnaround could a "take a while" and may require a new generation of consumers.
FBR analysts see continued margin pressure amid stiff international competition ahead.
New Albany, Ohio-based Abercrombie & Fitch is a specialty retailer that operates stores and direct-to-consumer operations.
The company sells a varitey of products, including casual sportswear apparel, personal care products, and accessories.
Separately, TheStreet Ratings team rates ABERCROMBIE & FITCH as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate ABERCROMBIE & FITCH (ANF) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- ANF's debt-to-equity ratio is very low at 0.26 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.01, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for ABERCROMBIE & FITCH is rather high; currently it is at 65.52%. Regardless of ANF's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ANF's net profit margin of -8.91% significantly underperformed when compared to the industry average.
- Net operating cash flow has significantly decreased to -$93.78 million or 133.63% 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 company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Specialty Retail industry and the overall market, ABERCROMBIE & FITCH's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: ANF Ratings Report