Guess? Inc. (NYSE: GES) designs,
markets, distributes and licenses a trendy, upscale collection of contemporary apparel, accessories and related consumer products. The company operates 391 retail stores in the United States and Canada and 607 retail stores outside of North America, of which 63 are directly owned. It also distributes products through department and specialty stores around the world. Competitors include Gap Inc. (NYSE GPS) and Abercrombie & Fitch (NYSE: ANF).
Guess? surprised investors last week, when it reported Q1 EPS of 51 cents and revenues of $489.2 million. Analysts had been looking for 46 cents and $451.6 million. The CEO noted that international expansion continued to yield strong results. Management also guided Q2 EPS to 47-49 cents (47 cent consensus), Q2 revenues to $455-$465 million ($456.27M consensus), FY09 EPS to $2.40-$2.48 ($2.44 consensus) and FY09 revenues to $2.03-$2.08 billion ($2.05B consensus). Brean Murray subsequently remarked that the firm's projections remained conservative on a number of levels. Wedbush Morgan reiterated its "buy" recommendation on the shares.
The stock popped
on the news and then moved into a bullish "flag" pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Altogether, brokers recommend the issue with five "strong buys" and two "buys". Analysts expect a 23% average annual growth rate, through the next five years. The GES Sales Growth rate (29.44%), EPS Growth rate (34.21%), Operating Margin (17.58%), Return on Assets (18.96%), Return on Investment (27.46%) and Return on Equity (33.17%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 69% of the outstanding shares. The stock is one of those used to calculate the S&P 400 MidCap Index. Over the past fifty-two weeks, it has traded between $30.00 and $57.20. A stop-loss of $37.60 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.
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