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Here's Why Guess? (GES) is Tailor-Made for Solid Returns Now

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You must take a look at Guess?, Inc. (GES - Free Report) as the stock looks good on the back of its first-quarter fiscal 2018 results. This Zacks Rank #2 (Buy) stock boasts a Value and Momentum Score of 'B' and has a long-term earnings growth rate of 17.5%, which further highlights its inherent attributes. Let’s find out more.

Delving Deeper

Having strong presence in almost 90 countries outside U.S. and Canada, Guess? is expanding fast in the European and Asian countries considerably owing to ample opportunities in the aforementioned regions.

The company also plans to expand into emerging markets like Brazil, Germany and Russia and grow the ‘G by GUESS’ concept both domestically and internationally.

Despite intensely competitive retail environment, the company expects improvement in both Europe and Asia in fiscal 2018 as the company is on track with its expansion plans. In the Americas, the company expects to remain focused on profitability improvements, backed by plans of rent reductions and closing underperforming stores.

The company has also been focusing on linking the brick-and-mortar stores, e-Commerce and mobile sales to improve its e-Commerce operations. This has enabled customers to reserve merchandise online and pick them up in stores.

In fact, the company has a healthy cost management structure. The company has decided to refocus its resources on regions that have a strong trend and very positive longer-term outlook. In this regard, Guess? will continue to allocate the majority of its capital investments in Europe and Asia, and will reduce its footprint and cost structure in the U.S. The company also expects to implement supply chain initiatives to drive profit in fiscal 2018.

Guess? shares declined nearly 23.7% in the past one year. However, the company posted better-than-expected first-quarter fiscal 2018 results, following which shares of this apparel company rallied nearly 13.2% in the last one month. This upside outperformed the Zacks categorized Textile-Apparel Manufacturingand broader Consumer Discretionary Sector, which gained just 3.0% and 1.3%, respectively, in the same time frame.

Guess? reported a loss of 24 cents in first-quarter fiscal 2018 which was narrower than the Zacks Consensus Loss Estimate of 31 cents and management’s guided loss range of 30–33 cents.

Notably, what came as a big surprise for investors was that the company’s top line beat the Zacks Consensus Estimate for the first time after four straight quarters of miss. Net revenue came in at $458.6 million in the quarter that improved 2.2% and also outpaced the Zacks Consensus Estimate of $447 million.

On a constant-currency basis, revenues grew 4%. The upside came on the back of solid sales at the Europe, Asia and American Wholesale segments, somewhat offset by soft revenues across the Americas Retail and Licensing segments.

Guess? raised its fiscal 2018 outlook after posting impressive first quarter. Now, management expects consolidated net revenue to rise between 3.5–5% versus 2–4%, guided earlier. The impact of 53rd week on the revenues is anticipated to rise by 1%. Adjusted earnings per share for fiscal 2018 are forecasted in the range of 34–44 cents.

Which Way are Estimates Treading?

Estimates are rising for fiscal 2018 and fiscal 2019 over the past 30 days, following the robust first-quarter fiscal 2018 results. The Zacks Consensus Estimate for the fiscal 2018 increased 14.7% to 39 cents and for fiscal 2019, it grew 5.6% to 57 cents per share.

Guess?, Inc. Price, Consensus and EPS Surprise

 

Guess?, Inc. Price, Consensus and EPS Surprise | Guess?, Inc. Quote

Other Stocks to Consider

Investors interested in the same industry may consider Cherokee Inc. , Tailored Brands, Inc. and Gildan Activewear, Inc. (GIL - Free Report) .

Cherokee and Tailored Brands both sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Gildan Activewear carries a Zacks Rank #2 (Buy).

While Cherokee and Tailored Brands have long-term earnings growth of 15.00% and 16.50%, Gildan Activewear has a growth rate of 12.33% in the long run.

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