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
-
How a Part-Time Job in Retirement Can Boost Your Social LifeA part-time job in retirement, like walking dogs or helping with home projects, can combat loneliness by sparking new friendships and boosting your social life.
-
What Set Warren Buffett ApartAs Warren Buffett prepares for retirement, we reflect on what we've learned from his 60 years of leadership at Berkshire Hathaway.
-
What Tariffs Mean for Your Sector ExposureNew, higher and changing tariffs will ripple through the economy and into share prices for many quarters to come.
-
How to Invest for a Fall Interest Rate Cut by the FedA lot can happen between now and then, but the probability the Fed cuts interest rates in September is back above 80%.
-
Are Buffett and Berkshire About to Bail on Kraft Heinz Stock?Warren Buffett and Berkshire Hathaway own a lot of Kraft Heinz stock, so what happens when they decide to sell KHC?
-
How the Stock Market Performed in the First 6 Months of Trump's Second TermSix months after President Donald Trump's inauguration, take a look at how the stock market has performed.
-
If You'd Put $1,000 Into Berkshire Hathaway Stock 20 Years Ago, Here's What You'd Have TodayBerkshire Hathaway is a long-time market beater, but the easy money in BRK.B has already been made.
-
If You'd Put $1,000 Into Procter & Gamble Stock 20 Years Ago, Here's What You'd Have TodayProcter & Gamble stock is a dependable dividend grower, but a disappointing long-term holding.
-
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?
