Guess Q3 Earnings: Is GES Expensive at 65.6x Price/EPS?

in EARNINGS/INVESTING IDEAS by

Guess, Inc. (NYSE:GES) is scheduled to report Q3 earnings results on Tuesday, November 26, 2019. Management plans to webcast a conference call at 4:45 p.m. (ET) to discuss the results.

The company is expected to report earnings of $0.18/share on revenue of $620 million. The consensus earnings per share (EPS) of $0.18/share is based on a poll of 5 analysts and represents a growth of 38.5% over the same quarter last year when the company reported earnings of $0.13/share.

The revenue forecast of $620 million based on a poll of 5 analysts implies a year-over-year (YoY) growth of 2.4%. Last year the company reported $605.4 million in revenue for the quarter.

Expected to report EPS growth of $0.05/share for Q3, 2019
Metric Expected Prior Year YoY Change
Revenue $620.00 $605.41 2.4%
EPS $0.18 $0.13 38.5%

Earnings Call Trends

Historically, management has exceeded analyst expectations 4 out of the last 8 tracked quarters, missed 2 quarters, and met expectations 2 quarters. What are your expectations from Guess for earnings this quarter? Let us know in the comments!

Analyst Expected vs Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.29 $0.38 31.0% Beat
Q1, 2020 -$0.25 -$0.25 NM Meet
Q4, 2019 $0.76 $0.70 -7.9% Missed
Q3, 2019 $0.16 $0.13 -18.8% Missed
Q2, 2019 $0.33 $0.36 9.1% Beat
Q1, 2019 -$0.24 -$0.23 NM Beat
Q4, 2018 $0.54 $0.62 14.8% Beat
Q3, 2018 $0.12 $0.12 0.0% Meet

One question we always consider here at the Bankers’ Tribune is how important are earnings reports to Guess’s stock price performance? It’s more important for some companies than for others.

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending August 3, 2019, the stock price reacted by increasing by 29.4%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-08-28 $14 $18.12 29.4% Increase
2019-06-06 $15.91 $14.42 -9.4% Decline
2019-03-20 $22.52 $19.31 -14.3% Decline
2018-11-28 $21.48 $22.42 4.4% Increase

Fundamentals And Technical Analysis

Guess is currently trading at $18.84/share, up 2.2% for the day. The company is trading at approximately 77.7% of its 52-week high of $24.25/share. The company’s stock price is up 4.0% since the last earnings report and up 6.1% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 55.86 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

The current share price implies a price-to-earnings (P/E) multiple of 65.6x and a forward P/E multiple of 12.9x. Guess’s current share price also implies a price-to-book (P/B) multiple of 2.1x. The following table summarizes some other key fundamental ratios:

Data as of November 26, 2019
Metric Value
Last Fiscal Period FY2020.Q2
Period End Date August 3, 2019
Stock Price (Current) $18.84
P/E Ratio 65.6x
P/E Ratio (Fwd) 12.9x
PEG Ratio 0.7
Total Debt to Capital (%) 51.3%
Levered Free Cash Flow -$16.288 million
Enterprise Value / EBITDA 11.8x

Source: Finbox

Company Profile: Guess, Inc.

Guess, Inc. is a small-cap stock with a market capitalization of $1.21 billion and a total enterprise value of $2.373 billion. The company operates in the Consumer Discretionary sector and Specialty Retail industry.

Guess?, Inc. designs, markets, distributes, and licenses lifestyle collections of apparel and accessories for men, women, and children. It operates through five segments: Americas Retail, Americas Wholesale, Europe, Asia, and Licensing. The company’s clothing collection includes jeans, pants, skirts, dresses, shorts, blouses, shirts, jackets, knitwear, and intimate apparel.

The company also grants licenses to design, manufacture, and distribute various products that complement its apparel lines, such as eyewear, watches, handbags, footwear, kids’ and infants’ apparel, outerwear, fragrance, jewelry, and other fashion accessories. The company markets its products under GUESS, GUESS?, GUESS U.S.A., GUESS Jeans, GUESS? and Triangle Design, MARCIANO, Question Mark and Triangle Design, a stylized G and a stylized M, GUESS Kids, Baby GUESS, YES, G by GUESS, GUESS by MARCIANO, and Gc brand names.

It sells its products through direct-to-consumer, wholesale, and licensing distribution channels. As of February 2, 2019, the company directly operated 1,161 retail stores in the Americas, Europe, and Asia. Its licensees and distributors operated an additional 558 retail stores worldwide.

The company also offers its products through its retail Websites. Guess?, Inc. was founded in 1981 and is headquartered in Los Angeles, California.

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