What's the difference between a couple of tanking stocks?

Design Within Reach (DWRI) and Pier One Imports (PIR), two home furnishings retailers have recently visited their 52-week lows. DWRI sells high end design at ever-so-slightly less than high end prices via "studios" in cities and ritzy towns (think Greenwich, CT, and Princeton, NJ) throughout the US. PIR sells glorified dorm room rattan furniture by securing the services of Kirstie Alley pre-Fat Actress and Thom Filicia after Queer Eye exhausted its formula.

I guess you can see where I'm going with this one. If you just used CNBC's Stock Scouter, you'd see little difference. DWRI scores a lowly 3/10, while PIR achieves an even lower 2/10. Here are the Stock Scouter details for DWRI:

Fundamental
Grade: D
• The most recent quarterly earnings report was slightly lower than analysts' consensus forecast. Neutral/Negative
• Earnings growth information is unavailable or inconsistent.
• One or more analysts has modestly decreased quarterly earnings estimates for DWRI. Negative

Ownership
Grade: C
• Insider trading information is unavailable or inconsistent.
• Shares are under heavy accumulation by financial institutions. Positive for a small company like DWRI

Valuation
Grade: C
• The price-to-earnings multiple is higher than the average for all stocks in the StockScouter universe. Negative
• The price-to-sales multiple is slightly higher than the average for all stocks in the StockScouter universe. Negative for a small company like DWRI
• The ratio of DWRI's price-to-earnings multiple to its five-year growth rate is unavailable or inconsistent.

Technical
Grade: F
• The StockScouter measure of relative price change and consistency is very low. Very negative
• Previous day's closing price for DWRI was significantly below its 50-day moving average, a level from which prices frequently rebound over the long term. Positive

And here are the Stock Scouter details for PIR:

Fundamental
Grade: F
• The most recent quarterly earnings report was slightly lower than analysts' consensus forecast. Neutral/Negative
• Earnings growth in the past year has decelerated rapidly compared to earnings growth in the past three years. Negative
• One or more analysts has modestly decreased quarterly earnings estimates for PIR. Negative

Ownership
Grade: F
• Two or more executives, directors or major shareholders sold a large number of shares recently. Very negative
• Institutional holdings information is unavailable or inconsistent.

Valuation
Grade: C
• The price-to-earnings multiple is higher than the average for all stocks in the StockScouter universe. Negative
• Price-to-sales information is unavailable or inconsistent.
• The ratio of PIR's price-to-earnings multiple to its five-year growth rate is negative or below the average of all stocks in the StockScouter universe. Negative

Technical
Grade: F
• The StockScouter measure of relative price change and consistency is very low. Very negative
• Previous day's closing price for PIR was slightly below its 50-day moving average. Negative

Okay, these are not promising grades, more like the Delta House's performance recited by Dean Wormer.

Now let's look at the Investor's Business Daily's infomation for DWRI:

Earnings Per Share (EPS) Rating 97 - Design Within Reach Inc has outperformed 97% of all publicly-traded companies based on its short and long term earnings growth rates.

Relative Price Strength (RS) Rating 7 - Design Within Reach Inc has outperformed 7% of all publicly-traded companies in terms of its stock price performance over the last 12 months.

Industry Group Relative Strength (Grp RS) Rating D - Design Within Reach Inc belongs to an industry group that has performed in the bottom 40% of the 197 industry groups tracked by Investor's Business Daily, measured over the last six months.

Sales + Profit Margins + ROE (SMR) Rating A - Design Within Reach Inc rates in the top 20% of all publicly-traded companies based on four fundamental factors used by many analysts today: a company's sales growth rate over the last three quarters, before- and after-tax profit margins, and return on equity (ROE).
Accumulation/ Distribution (Acc/Dis) Rating D- - Design Within Reach Inc stock has been experiencing moderate selling, based on its daily price and volume changes over the last 13 weeks.

And the IBD infomation for PIR:

Pier 1 Imports Inc (PIR) Ratings as of 8/29/2005

Earnings Per Share (EPS) Rating - 25 - Pier 1 Imports Inc has outperformed 25% of all publicly-traded companies based on its short and long term earnings growth rates.

Relative Price Strength (RS) Rating - 5 - Pier 1 Imports Inc has outperformed 5% of all publicly-traded companies in terms of its stock price performance over the last 12 months.

Industry Group Relative Strength (Grp RS) Rating - D - Pier 1 Imports Inc belongs to an industry group that has performed in the bottom 40% of the 197 industry groups tracked by Investor's Business Daily, measured over the last six months.

Sales + Profit Margins + ROE (SMR) Rating - D - Pier 1 Imports Inc rates in the bottom 40% of all publicly-traded companies based on four fundamental factors used by many analysts today: a company's sales growth rate over the last three quarters, before- and after-tax profit margins, and return on equity (ROE).

Accumulation/ Distribution (Acc/Dis) Rating - D- - Pier 1 Imports Inc stock has been experiencing moderate selling, based on its daily price and volume changes over the last 13 weeks.

This sector has not done well in the market lately, which explains the D grades in Industry Group Relative Strength. Howevern the difference between these companies is really night and day. DWRI garners some low grades, such as the F in Technical and D- in Accumulation/Distribution because the price is down and there's been heavy selling. That's exactly where we want to find a cheap stock. DWRI recently lowered its guidance and has taken quite the hit from the market as detailed below:

By Mark Martinez
TheStreet.com Staff Reporter
8/5/2005 11:06 AM EDT
Design Within Reach (DWRI:Nasdaq - news - research) fell 22% after the company previewed second-quarter earnings that fell below expectations and lowered its 2005 earnings outlook. The design furnishings and accessories company reported preliminary earnings of $1.4 million, or 9 cents a share, on sales of $41.9 million. Analysts were expecting earnings of 10 cents a share on sales of $39 million. A year ago, the company earned $806,000, or 7 cents a share, on sales of $28.2 million. Looking ahead, Design Within Reach now expects 2005 earnings of 40 cents to 42 cents a share, which is well below its previous guidance of 51 cents a share. Guidance "reflects the company's decision to minimize the use of promotional activity to offset product and shipping margin pressures and additional Sarbanes-Oxley compliance expenses," the company said. As for the sales, the company remains comfortable with guidance of $160 million to $165 million. Analysts had been expecting earnings of 51 cents a share on sales of $167.5 million. Shares were trading down $3.78 to $13.41.

I think, in spite of all this bad news, that DWRI is an growth company with an intriguing product line and catalog. Although earnings missed Wall Street expectation, just look at its growing sales figures. And if you check out their locations on their website, there are still plenty of tony towns without Design within Reach locations. So I'm adding DWRI to the WershovenistPig stock watch list.

On the other hand, PIR is ubiquitous and a bit dowdy. It's not a growth play. So even though PIR's stock price in in the bargain bin with DWRI, it's too shoddy to be added to the stock watch list.