I thought I’d take a quick look at our ranking for Ted Baker, after the latest news that two senior members of their management team are stepping down and they company issued a profit warning, initially causing the share price to drop 36%.
This is also after Ted Baker admitted that they’d overstated the value of their inventory, which was only worth £5m rather than £25m, last week.
Quality & Momentum
As you’d expect, their Quality and Momentum rankings vs our entire stock universe are pretty poor, while their Value ranking is high because of the already depressed share price, that’s been hit by the bad news earlier in the year.
This does show that they’ve managed to generate reasonable returns and cash flow (Profitability) and their sales growth has beaten analyst’s expectations (Revenue). But those are the only positive metrics, besides the Value factors.
There was a similar change back in October when Ted Baker reported it’s poor first-half results and 3 out of 9 of the analysts whose ratings we’re tracking downgraded the stock.
Obviously the issues with the leadership team will be a major distraction too.
Comparing them to their 99 peers (stocks in the Consumer Discretionary sector, in the UK), really highlights their weakness.
If this carries on, I have a feeling that Mike Ashley will have a new acquisition target