Guess? Inc (GES, Financial) recently experienced a significant daily drop of -12.27%, yet it maintains a 3-month gain of 15.61%. With an Earnings Per Share (EPS) of $2.13, investors are keen to understand if the stock is trading at a fair value. This article delves into the intrinsic valuation of Guess? Inc (GES), encouraging readers to explore the detailed analysis that follows.
Company Introduction
Guess? Inc designs, markets, distributes, and licenses contemporary apparel and accessories with a European fashion flair. Its brand portfolio includes Guess, Marciano, and G by Guess, with operations segmented into Americas Retail, Americas Wholesale, Europe, Asia, and licensing. The Europe segment is the primary revenue driver for the company. When comparing the current stock price of $20.81 with the GF Value of $22.5, it appears that Guess? Inc (GES, Financial) is fairly valued.
Summarize GF Value
The GF Value is a unique measure of a stock's intrinsic value, incorporating historical trading multiples, an adjustment factor based on past performance and growth, and estimates of future business performance. If a stock trades significantly above this line, it's considered overvalued, and below it, undervalued. Guess? Inc (GES, Financial), with a market cap of $1.10 billion, aligns closely with the GF Value, suggesting it is fairly valued. Consequently, the stock's long-term return is likely to mirror the business's growth rate.
Financial Strength
Assessing a company's financial strength is crucial before investing. Guess? Inc's cash-to-debt ratio of 0.24 is lower than 64.51% of its peers in the Retail - Cyclical industry, indicating fair financial stability with a financial strength rating of 5 out of 10.
Profitability and Growth
Guess? has a track record of profitability, with an operating margin of 8.55% that outperforms 71.86% of its industry counterparts. The company's profitability rank is a solid 7 out of 10. However, its 3-year average revenue growth rate is below the industry median, though its EBITDA growth rate of 9.6% is competitive within the Retail - Cyclical sector.
ROIC vs. WACC
A key indicator of value creation is when a company's Return on Invested Capital (ROIC) exceeds its Weighted Average Cost of Capital (WACC). Guess? Inc's ROIC of 11.85 is well above its WACC of 5.83, signaling effective capital management.
Conclusion
In summary, Guess? Inc (GES, Financial) appears to be fairly valued in the current market. The company's financial health and profitability are deemed fair, with growth rates that are competitive within the industry. To gain a deeper understanding of Guess? Inc's financials, investors are encouraged to review the 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
