Guess? Inc. reported record profits last week for the year ending December 31, 2005 -- and its price plunged from more than $46 to $37. Why? Because management offered conservative guidance on first quarter 2006 profits. But Zacks Equity Research thinks the selloff offers a terrific buying opportunity.
Guess (symbol GES) designs, sells and licenses casual apparel, especially denim, in the U.S. and abroad. The company operates 315 stores -- up 10% from last year -- and also sells its jeans over the Internet, to other retailers and via licenses for watches, handbags, shoes and the like. "Guess remains a popular brand for customers seeking denim fashions and accessories," says Zacks. "This is helping the company enjoy the favorable fashion cycle for denim and leading to strong sales growth."
The numbers look good. Zacks expects per-share earnings to increase from $1.31 last year to $1.56 in 2006 and $1.90 next year. That gives the stock a price-earnings ratio of 24 on this year's estimate, and 20 on next year's. That's cheap measured against Zacks' forecast of several years of 20% earnings growth. The growth is being driven, Zacks says, not only by sales growth, but also by manufacturing efficiencies that are increasing profit margins. Zacks expects Guess to post double-digit operating margins the next three years.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
--Steven Goldberg
-
I'm a Financial Strategist: This Is the Investment Trap That Keeps Smart Investors on the SidelinesForget FOMO. FOGI — Fear of Getting In — is the feeling you need to learn how to manage so you don't miss out on future investment gains.
-
Can You Be a Good Parent to an Only Child When You're Also a Business Owner?Author and social psychologist Susan Newman offers advice to business-owner parents on how to raise a well-adjusted single child by avoiding overcompensation and encouraging chores.
-
My Three-Day Rule for Investing: And If it Applies NowStock Market I've seen a lot in my career. Here's what I see now in the stock market.
-
Is It Time to Invest in Europe?Stock Market Europe is being shaken out of its lethargy, militarily and otherwise, by Donald Trump's changes in U.S. policy. Should investors start buying?
-
Fed Leaves Rates Unchanged: What the Experts Are SayingFederal Reserve As widely expected, the Federal Open Market Committee took a 'wait-and-see' approach toward borrowing costs.
-
Fed Sees Fewer Rate Cuts in 2025: What the Experts Are Saying
Federal Reserve The Federal Reserve cut interest rates as expected, but the future path of borrowing costs became more opaque.
-
Why Is Warren Buffett Selling So Much Stock?Berkshire Hathaway is dumping equities, hoarding cash and making market participants nervous.
-
Fed Cuts Rates Again: What the Experts Are Saying
Federal Reserve The central bank continued to ease, but a new administration in Washington clouds the outlook for future policy moves.
-
If You'd Put $1,000 Into Google Stock 20 Years Ago, Here's What You'd Have TodayGoogle parent Alphabet has been a market-beating machine for ages.
-
Fed Goes Big With First Rate Cut: What the Experts Are Saying
Federal Reserve A slowing labor market prompted the Fed to start with a jumbo-sized reduction to borrowing costs.
