5/07/2012

Years of Price Underperformance with Years of Valuation Improvements


GES: Guess' Inc. (GES)
Guess?, Inc. designs, markets, distributes, and licenses apparel and accessories. "As of January 28, 2012, the company directly operated 504 stores in the United States and Canada; 251 stores outside of the United States and Canada; an additional 230 smaller-sized concessions in Asia and Europe; and retail Websites in the United States, Canada, Europe, and South Korea. Its international licensees and distributors operated 804 stores outside the United States and Canada; and 119 smaller-sized licensee operated concessions in Asia."
GES has been significantly underperforming the Apparel  index. The size of their underperformance doesn't seem warranted.  The Apparel index posted 16.8 %,  27.14% and  28.05% for the 3 month, YTD and 1 year performance respectively versus negative results for GES of -11.19%, -5.23% and -31.27% for the same periods. Far from a perfect stock but at the right price, the large variance versus the industry index, and significant valuation improvements  using enterprise value versus sales and book value coupled with strong relatively stable gross margins, ROIC, near 52 week low and modest top line growth warrants a closer.
Sales and book value versus the enterprise value per share continue to improve over several years. Gross margins have been solid around 44%. ROIC still over 20% for the past few years, 3% sales growth for the quarterly YOY results.


2008-01 2009-01 2010-01 2011-01 2012-01 Current
Price 39.65 27.45 28.22 37.87 35.75 28.06
EV Per Share $42.35 $29.33 $28.30 $39.92 $37.63 $29.85
BV Per Share $7.01 $8.29 $11.14 $11.45 $12.79 $12.79
Sales Per Share $18.68 $22.37 $23.24 $27.00 $29.23 $29.23
ROIC 26.23 28.00 26.23 27.49 23.53 23.53
GM% 45.30 44.10 44.20 43.80 0.00 43.30
FCF/Sales 4.30 6.62 12.96 8.98 8.91 8.91
EV/Sales 2.27 1.31 1.22 1.48 1.29 1.02
EV/BV 6.04 3.54 2.54 3.49 2.94 2.33
2008 vs Current
YOY Price Change -30.77% 2.81% 34.21% -5.61% -21.51% -41.29%
YOY EV Change -30.75% -3.50% 41.04% -5.74% -20.67% -41.88%
YOY EV/Sales Change -72.97% -7.64% 17.61% -14.86% -26.05% -122.09%
YOY EV/Book Change -70.79% -39.18% 27.10% -18.45% -26.05% -158.72%
Currrent Div Yield =  2,70%
Current Price = $28.06


2 comments:

Anonymous said...

How are you calculating ROIC?

ShadowStock said...

For this exercise you will find these ROIC numbers on MORNINGSTAR.COM