Is Men's Wearhouse a Buy After Q1 Report?

Posted Jun 10th 2010 9:30AM by Steven Mallas
Filed under: Earnings Reports

Men's Wearhouse (MW) is an intriguing stock as it's been a trading vehicle for the most part. Over the last twelve months, you can see that it's been up, then down, then up again, and then ... well, you get the picture. On Wednesday, the retailer, famous for its fine clothing lines for men, issued its Q1 report after the bell. At the time of this writing, the market was giving the numbers a big thumbs-up during the extended session, pushing the stock up over 5% to $19.66.

This got my notice because I'm wondering if the equity might be heading for another up-cycle. At the close of regular trading, the stock was down a little less than 1% to $18.67. The 52-week low is $16.51. Do you get the feeling that traders think this one got too beaten up?

The company's earnings per share more than doubled to 26 cents. According to TheFly, estimates were obliterated, as they were set at 14 cents. Same-store sales improved at Men's Wearhouse, rising 2.4% versus a decline of 7% in the year-ago period. Unfortunately, the K&G asset experienced a 4.9% drop in comps; last year at this time, it was up 2.3%.

Still, I'm fascinated by the idea that the stock is now a trade. It scares me a little, because I was pretty bearish back in March when I covered the chain's fourth-quarter release.

Of course, the stock was higher then. I say traders should put this one on a watch list and study the price action carefully. However, what I don't like about any potential trade these days: the bear market. Don't underestimate it. Wednesday's after-hours session action was interesting, as is the earnings beat. Call me cautiously bullish on this one.

Disclosure: I don't own any company mentioned; positions can change without notice.

Tags: clothing, fashion, inthenews, mens wearhouse, MW, retail