Aeropostale (ARO) Scores Low on 3 Parameters

A balanced diet is the key to good health. With widespread awareness about the importance of nutritious foods, consumers are now ready to shell out extra money. How about applying the same principle for a healthy portfolio? Exiting an underperforming stock at the right time helps to maximize your portfolio's return. Hence, we have tried to assess Aeropostale, Inc. ARO on three basic parameters. Let's delve deeper.

From Stock Price Performance Perspective

Shares of this specialty retailer of casual apparel and accessories have been plunging, and touched a 52-week low of $0.77 on Sep 14. Year-to-date, this Zacks Rank #3 (Hold) stock has nosedived approximately 66.5%. Moreover, shares have plummeted roughly 36.5% following the company's last earnings release on Aug 27. It has been over six months since the stock hit a 52-week high. It had last reached the pinnacle on Mar 2, 2015.

From Last Quarter's Performance Perspective

In the second quarter of fiscal 2015, this New York-based company's adjusted loss of 56 cents per share was in line with the Zacks Consensus Estimate but was much wider than the prior-year quarter loss of 46 cents per share. Net sales plunged 17.5% to $326.9 million, with comparable-store sales (comps), including the e-commerce channel, declining 8% year over year.

Aeropostale's performance was mainly impacted by weak demand of its products and stiff competition. Consequently, management now estimates net loss in the band of 30–38 cents a share for third-quarter fiscal 2015. Moreover, the company hinted that comps in the third quarter might decline in the low-single-digits.

Aeropostale has been facing lack of demand for its products due to a challenging teen retail environment. However, to battle dwindling revenues, the company has taken to international expansion in a big way. In July, the company announced that it has entered into licensing agreements with India-based Arvind Lifestyle Brands Limited and Indonesia-based PT Mitra Adiperkasa TBK with an aim to expand in these countries.

From Estimate Revisions Perspective

Following Aeropostale's discouraging performance and dull outlook, the Zacks Consensus Estimate witnessed a downtrend as analysts lowered their estimates in order to better align with management's guidance.

Analysts polled by Zacks are now less constructive on the stock's future performance. The Zacks Consensus Estimate for fiscal 2015 tumbled to a loss of $1.43 per share from a loss of $1.35 per share in the past 30 days. For fiscal 2016, the Zacks Consensus Estimate has slid to a loss of 95 cents per share from a loss of 84 cents per share over the same time frame.

Stocks That Warrant a Look

Some better-ranked stocks in the same industry include Express Inc. EXPR, Destination XL Group, Inc. DXLG and Foot Locker, Inc. FL. All three stocks carry a Zacks Rank #1 (Strong Buy).

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