Based on the aggregated intelligence of 150,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, women's-apparel retailer AnnTaylor Stores (NYSE: ANN ) has received a distressing two-star ranking.
With that in mind, let's take a closer look at AnnTaylor's business and see what CAPS investors are saying about the stock right now.
AnnTaylor facts
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Headquarters (Founded)
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New York City (1986)
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Market Cap
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$919.2 million
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Industry
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Apparel retail
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Trailing-12-Month Revenue
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$1.8 billion
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Management
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CEO Katherine Krill (since 2005)
CFO Michael Nicholson (since 2007)
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Trailing-12-Month Return on Equity
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(65.5%)
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1-Year Return
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161.5%
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Cash/Debt
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$139.8 million / $3.7 million
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Competitors
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Liz Claiborne (NYSE: LIZ )
Talbots (NYSE: TLB )
New York & Company (NYSE: NWY )
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Highly Rated Apparel Alternatives
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American Eagle Outfitters (NYSE: AEO )
Under Armour (NYSE: UA )
The Buckle (NYSE: BKE )
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Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 34% of the 242 members who have rated AnnTaylor believe the stock will underperform the S&P 500 going forward. These bears include JackCaps and All-Star mrindependent, who is ranked in the top 1% of our community.
Late last year, JackCaps explained why the stock is ready to start sinking:
The good ship ANN is way too heavy to stay afloat. The gross profit is about 50% of revenues, but the crew's SG&A expenses consistently eats up the gross profit so there is nothing left for the passengers (a.k.a. shareholders). Unless this ship's officers start running a tighter ship, I suggest that you stay near a life boat.
In a pitch from just two days ago, mrindependent also tapped AnnTaylor as a bad fit for bargain-seeking Fools. Here's an excerpt:
The best thing I can say about Ann Taylor is that the company is debt free and has approximately $2.00 per share of cash on hand. On the other hand, 2.1X book seems expensive considering it is definitely not a growth company. Its best strategy is to shrink. Last year's loss was 80% of roe, but this was exaggerated by massive non-cash writeoffs. Even before its 80% loss year, ROE was unimpressive -- averaging about 10%. Excluding items, analysts expect eps of 68 cents for the year ending 01/11 -- up substantially since the last time I weighed in on this company. After subtracting the $2.00 cash from the share price, you get an adjusted share price of $13.21 which is 19.7 times expected earning for FY ended 01/2011.
What do you think about AnnTaylor, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!
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