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JoS. A. Bank Clothiers (JOSB) strutted its stuff on Monday, posting better-than-expected quarterly earnings and annual earnings that showed a 47% increase over 2003.
Shares have jumped nearly 14% since Friday's close. But Preston Silvey, an analyst at investment firm First Dallas Securities, in Dallas, Texas, says the stock is still attractive, particularly for long-term investors looking for growth at a good price.
The Maryland-based company said total sales increased 27% over last year, led by sportswear items. Suits, sportcoats and other products in the company's higher-end (and higher-margin) lines made up a larger percentage of sales than they did last year, which Silvey notes is helping improve gross margin.
Founded in 1905, JoS. A. Bank sells men's professional and casual clothing, footwear and accessories through its retail stores, catalog and Web site. It currently operates some 270 stores in 37 states.
Legg Mason analyst Richard Jaffe, who reiterated his "buy" rating on Tuesday morning, says the company should continue to benefit from increased demand for tailored men's clothing -- a trend he says is primarily being driven by younger customers buying suits for the first time. "The environment remains bright" for JoS. A. Bank, he says, as it gains share in the expanding market.
Jaffe predicts that the company's earnings will grow a whopping 15% to 20% annually, fueled in part by the company's plan to add 60 to 75 stores a year until 2007. Silvey predicts earnings growth of 20% or more annually over the next several years.
Silvey points to JoS. A. Bank's earnings growth potential as evidence that the stock isn't fully priced. At $34, shares sell for about 16 times his above-consensus earnings estimates of $2.14 per share for fiscal 2005 and $2.73 for 2006.
Jaffe sets his target price at $36.
--Lisa Dixon
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