G-III Apparel Group, Ltd.’s (GIII - Free Report) dismal run on the bourses might deter you from adding the stock to your portfolio. However, a detailed analysis of the stock’s performance may change your mind. Let’s delve deeper and find out the reasons why it is right time to buy the stock now.
So far this year, shares of this designer, manufacturer and marketer of men’s and women’s apparel have lost 25.4% compared with the industry’s 3.5% decline. Nevertheless, its Zacks Rank #2 (Buy) and an attractive valuation reflects the stock’s sound fundamentals.
Stock Looks Well Poised for 2019
In the retail landscape, G-III Apparel looks quite disciplined in its approach of tackling prevailing headwinds like soft retail business and stiff competition on the basis of brand recognition, innovation and pricing strategy. Also, the company has undertaken several strategies, including acquisitions and licensing of well-known brands, to expand product portfolio and make itself a diversified apparel and accessories company.
Acquisitions and licensing agreements over the years have led to the emergence of the company’s five global power brands — DKNY, Donna Karen, Calvin Klein, Tommy Hilfiger, and Karl Lagerfeld — which are poised to deliver solid long-term growth. The company expects its wholesale outerwear businesses to perform well in the upcoming quarters and remains well placed to exploit opportunities therein. Furthermore, in a bid to improve retail business, G-III Apparel is set to bring in new products and strengthen its ties with retailers besides rationalizing its store base.
Apart from these, GIII-Apparel remains on track with the process of bolstering brands across channels, with new launches, improved marketing strategies and consumer reach. It also plans to make efficient utilization of digital and social media platforms. Moreover, G-III Apparel’s wholesale segment is depicting a stellar show and driving the company’s overall performance. In fact, sales in this division witnessed 4% growth during the third quarter. Encouragingly, management expects wholesale business to continue growing in the upcoming periods.
For fiscal 2019, G-III Apparel anticipates net sales close to $3.08 billion compared with approximately $3.06 billion projected earlier. Also, management expects earnings in the range of $2.67-$2.77 per share compared with the prior projection of $2.52-$2.62. In fiscal 2018, the company reported sales and earnings of $2.81 billion and $1.60 per share, respectively.
Valuation Looks Attractive
A brief glance at some valuation metrics seems to indicate that GIII-Apparel has enough room to run on the bourses. Further, a Value Score of B also indicates the same.
GIII-Apparel with a price to sales ratio of 0.5 compared with that of industry’s 1.8 indicates that the stock has enough upside potential. The stock also looks attractive with respect to a forward price-to-earnings (P/E) multiple of 10.0x versus industry’s 13.9x. A more-or-less similar picture emerges when comparing EV/EBITDA ratios. GIII-Apparel holds the edge here with an EV/EBITDA ratio of 7.4 lower than 14.1 for the industry.
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