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Reasons Why Guess? (GES) Should be in Your Portfolio Now

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Guess? Inc. (GES - Free Report) is well poised for growth courtesy of strength across its businesses, a focus on strategic priorities, effective pricing actions and shareholder-friendly policies. The company has been benefiting from its growing online business.

The Zacks Consensus Estimate for GES’ fiscal 2024 sales and earnings per share (EPS) is currently pegged at $2.8 billion and $3.01, respectively, suggesting growth of 3.7% and 9.9%, respectively, from the corresponding year-ago reported figures. This reflects the analysts’ optimism about the stock.

This Zacks Rank #1 (Strong Buy) stock has gained 13.1% in the past six months compared with the industry’s growth of 1.7%.

Zacks Investment Research
Image Source: Zacks Investment Research

Let’s delve into the factors that make investing in this apparel and accessories company a smart choice at the moment.

Guess? has been witnessing solid momentum in its businesses across Europe and Asia, supported by strong demand in retail end markets. The company’s Europe segment has been gaining from solid retail store sales. Of late, increased consumer activity in Korea has also been driving its Asia unit’s performance.

In second-quarter fiscal 2024, revenues from Guess?’s Europe segment increased by 9% and the same for the Asia unit jumped by 19%. Driven by business strength, GES expects revenues to grow by 2.5-4% in fiscal 2024. The company anticipates fiscal 2024 adjusted EPS of $2.88-$3.08, higher than $2.74 recorded in fiscal 2023.

The company is on track with its customer-centric initiatives, including omnichannel capabilities, advanced data analytics and customer segmentation. With respect to its digital-first initiative, the company has been investing in brand-building through social media platforms. It is concentrating on linking brick-and-mortar stores, e-commerce and mobile sales to improve its online operations.

Guess? has also been implementing upgrades to its store and e-commerce infrastructure to increase customer conversion. For instance, it upgraded its store infrastructure, including the implementation of mobile point-of-sale check-out, Salesforce Customer 360 and a real-time inventory and sales dashboard.

It remains focused on rewarding shareholders through dividend payouts and share repurchases. In second-quarter fiscal 2024, it repurchased 2.2 million shares, amounting to $42.8 million. In fiscal 2023, it repurchased nearly 9 million shares for $186.7 million. In May 2023, management approved a 33% hike in its quarterly dividend, from 22.5 cents per share to 30 cents.

GES remains focused on streamlining its cost structure to boost its operating model and reduce operating expenses. These cost savings are expected to be reinvested in amplifying the company’s marketing and omnichannel capabilities.

Other Stocks to Consider

Here we have highlighted three other top-ranked stocks from the same space.

Abercrombie & Fitch (ANF - Free Report) , a specialty retailer, currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

ANF has a trailing four-quarter earnings surprise of 724.8%, on average. The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales suggests growth of 10.4% from the year-ago reported figure.

American Eagle Outfitters (AEO - Free Report) , a retailer of casual apparel, accessories and footwear, currently flaunts a Zacks Rank #1. AEO delivered an average earnings surprise of 43.2% in the last four quarters.

The Zacks Consensus Estimate for American Eagle Outfitters’ current financial-year sales indicates an increase of 1.5% from the year-ago reported figure.

Alto Ingredients (ALTO - Free Report) , a producer of specialty alcohols and essential ingredients, currently carries a Zacks Rank #2 (Buy). ALTO has an earnings surprise of 242.9% in the last reported quarter.

The Zacks Consensus Estimate for ALTO’s current financial-year earnings suggests growth of 125% from the year-ago period’s reported figure.

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