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G-III Apparel Group (GIII - Free Report) designs, sources, and markets women’s and men’s apparel globally. Its products include outerwear, dresses, sportswear, swimwear, handbags, footwear, and luggage. GIII markets its products under proprietary brand names such as DKNY, Eliza J, Marc New York, as well as licensed brands such as Calvin Klein, Tommy Hilfiger, and Cole Haan. The company offers its products to department, specialty, and mass merchant stores.
The Zacks Rundown
GIII has been severely underperforming the market as of late. A Zacks Rank #5 (Strong Sell) stock, GIII has been steadily trending downward for the better part of the last two years. The stock is hitting a series of 52-week lows and represents a compelling short opportunity as the market continues to hover in a deep correction.
GIII is part of the Zacks Textile – Apparel industry group, which currently ranks in the bottom 23% out of approximately 250 industries. Because this industry is ranked in the bottom half of all Zacks Ranked Industries, we expect it to underperform the market over the next 3 to 6 months. Candidates in the bottom half of industry groups can often represent solid potential short candidates. While individual stocks have the ability to outperform even when included in poor-performing industries, their industry association serves as a headwind for any potential rallies.
Also note how this industry has underperformed the market at nearly every turn over the past year:
Image Source: Zacks Investment Research
Weak Foundation: Falling Short on Earnings and Deteriorating Forecasts
Earnings misses have been a sore spot for G-III Apparel over the past year. The company has fallen short of estimates in two of the past four quarters. GIII most recently reported Q3 EPS back in November of $1.35/share, missing the $1.85 consensus estimate by -27.03%. This is the type of negative trend that the bears like to see.
Analysts have been revising earnings estimates downward as of late. For the current quarter, estimates have been slashed –32.39% over the past 60 days. The Q4 Zacks Consensus EPS Estimate now stands at $0.48/share, translating to negative growth of -51.02% relative to the same quarter last year – and this estimate may be high considering the string of misses lately.
Image Source: Zacks Investment Research
Technical Outlook
GIII stock has been steadily falling since 2021 and has now established a well-defined downtrend. Notice how both the 50-day (blue line) and 200-day (red line) moving averages are sloping down. Shares have declined nearly 50% in the past year. The stock continues to trade below both averages, while the 200-day moving average has acted as resistance several times throughout the down move:
Image Source: StockCharts
While not the most accurate indicator, GIII has also experienced what is known as a ‘death cross’, wherein the stock’s 50-day moving average crosses below its 200-day moving average. GIII would have to make a serious move to the upside and show increasing earnings estimate revisions to warrant taking any long positions in the stock.
Final Thoughts
The recent earnings misses in addition to deteriorating estimates are both huge red flags and need to be respected. These will likely serve as a ceiling to any potential rallies, nurturing the stock’s downtrend.
GIII’s characteristics have resulted in worst-possible scores in each of our Zacks Growth and Momentum Style Score categories, paving the way for an overall ‘F’ VGM score. The fact that GIII is included in a bottom-performing industry group simply adds to the growing list of concerns. Investors will want to steer clear of GIII until the situation shows major signs of improvement, or possibly include it as part of a hedge or short strategy.
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Bear of the Day: G-III Apparel Group (GIII)
G-III Apparel Group (GIII - Free Report) designs, sources, and markets women’s and men’s apparel globally. Its products include outerwear, dresses, sportswear, swimwear, handbags, footwear, and luggage. GIII markets its products under proprietary brand names such as DKNY, Eliza J, Marc New York, as well as licensed brands such as Calvin Klein, Tommy Hilfiger, and Cole Haan. The company offers its products to department, specialty, and mass merchant stores.
The Zacks Rundown
GIII has been severely underperforming the market as of late. A Zacks Rank #5 (Strong Sell) stock, GIII has been steadily trending downward for the better part of the last two years. The stock is hitting a series of 52-week lows and represents a compelling short opportunity as the market continues to hover in a deep correction.
GIII is part of the Zacks Textile – Apparel industry group, which currently ranks in the bottom 23% out of approximately 250 industries. Because this industry is ranked in the bottom half of all Zacks Ranked Industries, we expect it to underperform the market over the next 3 to 6 months. Candidates in the bottom half of industry groups can often represent solid potential short candidates. While individual stocks have the ability to outperform even when included in poor-performing industries, their industry association serves as a headwind for any potential rallies.
Also note how this industry has underperformed the market at nearly every turn over the past year:
Image Source: Zacks Investment Research
Weak Foundation: Falling Short on Earnings and Deteriorating Forecasts
Earnings misses have been a sore spot for G-III Apparel over the past year. The company has fallen short of estimates in two of the past four quarters. GIII most recently reported Q3 EPS back in November of $1.35/share, missing the $1.85 consensus estimate by -27.03%. This is the type of negative trend that the bears like to see.
Analysts have been revising earnings estimates downward as of late. For the current quarter, estimates have been slashed –32.39% over the past 60 days. The Q4 Zacks Consensus EPS Estimate now stands at $0.48/share, translating to negative growth of -51.02% relative to the same quarter last year – and this estimate may be high considering the string of misses lately.
Image Source: Zacks Investment Research
Technical Outlook
GIII stock has been steadily falling since 2021 and has now established a well-defined downtrend. Notice how both the 50-day (blue line) and 200-day (red line) moving averages are sloping down. Shares have declined nearly 50% in the past year. The stock continues to trade below both averages, while the 200-day moving average has acted as resistance several times throughout the down move:
Image Source: StockCharts
While not the most accurate indicator, GIII has also experienced what is known as a ‘death cross’, wherein the stock’s 50-day moving average crosses below its 200-day moving average. GIII would have to make a serious move to the upside and show increasing earnings estimate revisions to warrant taking any long positions in the stock.
Final Thoughts
The recent earnings misses in addition to deteriorating estimates are both huge red flags and need to be respected. These will likely serve as a ceiling to any potential rallies, nurturing the stock’s downtrend.
GIII’s characteristics have resulted in worst-possible scores in each of our Zacks Growth and Momentum Style Score categories, paving the way for an overall ‘F’ VGM score. The fact that GIII is included in a bottom-performing industry group simply adds to the growing list of concerns. Investors will want to steer clear of GIII until the situation shows major signs of improvement, or possibly include it as part of a hedge or short strategy.