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Bull of the Day: Guess? (GES)

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Guess? (GES - Free Report) is an apparel retailer based in Los Angeles that designs, markets, distributes, and licenses causal clothes and accessories for men, women, and children. Customers can find Guess Products at six different store concepts: the flagship Guess full-price retail stores, Guess factory outlet stores, Guess by Marciano stores, G by Guess stores, Guess Accessories Stores, and Guess Kids Stores.

Q2 Earnings Stronger Than Expected

Back in August, shares of Guess? soared over 27% after the retailer reported strong second quarter results.

Adjusted earnings per share came in at 38 cents, well above the Zacks Consensus Estimate of 29 cents per share. Revenues popped 6% to $683.2 million (up 9% if you exclude currency fluctuations), also beating our consensus estimate.

Geographically, its Europe operations jumped 9.1%, boosting Guess?’s overall second quarter performance; the Americans and Asia segments increased 0.9% and 0.6%, respectively.

"I am very pleased with our second-quarter financial performance, which delivered strong operating-profit growth. This performance exceeded our expectations and was driven by a solid top-line increase, strong margin performance, and effective expense management,” said CEO Carlos Alberini in the company’s earnings press release.

GES is On the ReboundGuess?, Inc. Price and Consensus

Shares of Guess? have actually been on the decline this year, along with many other retailers, as the company tries to navigate ongoing trade tensions, online competition, and other macro headwinds. The stock is down about 15.7% year-to-date compared to the S&P 500’s return of almost 20%.

But, earnings estimates have been rising, and GES is a Zacks Rank #1 (Strong Buy).

For the current fiscal year, two analysts have revised their bottom line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has risen nine cents from $1.35 to $1.26; earnings could see over 37% growth compared to the prior year period. 2020 looks pretty strong too, with earnings and revenue expected to continue positive year-over-year growth.

GES currently trades around 12.5X its forward full-year earnings estimates, a nice discount compared to the broader Consumer Discretionary Market.
Going forward, investors may see further upside to shares if Guess focuses on increasing its international footprint; the retailer believes there is more room to grow and it already gets more than half of its revenue outside of the U.S.

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