Shares of personalized clothing company Stitch Fix (SFIX, Financial) fell 38.13% after the company reported second-quarter earnings results. The stock is now priced at $2.32, reflecting significant investor disappointment.
Stitch Fix's full-year revenue guidance and EPS fell short of Wall Street's estimates. Additionally, the company's active clients were down 613,000 year on year.
Stitch Fix (SFIX, Financial) has been struggling with several key metrics. Despite a Piotroski F-Score of 7, indicating a relatively healthy financial situation, the company is experiencing substantial financial stress as highlighted by its Altman Z-Score of 2, which places it in the grey area.
Revenue per share has declined over the past three years, and the company's profitability is questionable with an earnings quality deemed poor based on a Sloan Ratio of -47.87%. Furthermore, insider selling has been rampant, with five transactions over the past three months totaling 647,383 shares sold.
On the brighter side, the Beneish M-Score of -4.72 suggests that Stitch Fix is unlikely to be a manipulator. However, the financial results also show zero earnings growth and dismal revenue growth rates: revenue growth is down 20.7% year over year, and there's been a 27.9% decrease over the past 52 weeks.
Valuation-wise, Stitch Fix appears "Modestly Undervalued" with a GF Value of $3.05. You can view the detailed valuation through the GF Value page. Despite the valuation metrics suggesting some room for potential growth, the market capitalization has shrunk to $283.84 million, which aligns with the severe stock price depreciation observed.
The company faces significant headwinds, including a debt-to-equity ratio of 0.63 and a net margin of -8.47%, which raises further concerns about its financial health. Investors should tread cautiously, given the high volatility and the overall negative outlook.
