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Why Ann (ANN) Is Gaining Today

Tickers in this article: ANN

NEW YORK ( TheStreet) --  Ann was gaining 8.4% to $37.80 Friday after beating analysts' expectations for earnings in the fourth quarter.

For the fourth quarter the parent company of the Ann Taylor and Loft brands posted earnings of 10 cents a share, beating analysts' estimates of 7 cents a share by 3 cents. Revenue grew 2.6% from the year-ago period to $623.3 million. That's in-line with the $623.8 million in revenue estimates by analysts surveyed by Thomson Reuters .

Looking to the first quarter, the clothing retailer expects revenue of $600 million. Analysts expect revenue of $613.3 million in the quarter.

"We are approaching the first-quarter outlook with caution given the extreme weather conditions, the heightened promotional environment and soft traffic," CEO Kay Krill said in a statement.

Ann also announced plans to cut 100 jobs, or 5% of its current full-time salaried workforce.

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TheStreet Ratings team rates ANN INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate ANN INC (ANN) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, solid stock price performance, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

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

  • The revenue growth came in higher than the industry average of 7.8%. Since the same quarter one year prior, revenues slightly increased by 7.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • ANN INC has improved earnings per share by 6.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, ANN INC increased its bottom line by earning $2.10 versus $1.63 in the prior year. This year, the market expects an improvement in earnings ($2.16 versus $2.10).
  • The net income growth from the same quarter one year ago has exceeded that of the Specialty Retail industry average, but is less than that of the S&P 500. The net income increased by 1.1% when compared to the same quarter one year prior, going from $40.75 million to $41.19 million.
  • You can view the full analysis from the report here: ANN Ratings Report

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