Jones Apparel Group [NYSE:JNY] Feb. 15, price [12:05 PM] $15.16
Yield = 3.69% 52-week range: $12.10 - $34.73
Shares of companies in pretty much the entire fashion industry has been pounded on recession fears. As such, many fine businesses are being offered at exceptionally cheap prices right now. A very good one in the area is Jones Apparel Group.
Jones Apparel designs and markets ladies clothing and footwear under a number of well known brand names including- Jones New York, Evan-Picone, Norton McNaughton, Gloria Vanderbuilt, Erika, Kasper, Nine West, Easy Spirit, Enzo Angiolini, l.e.i., Anne Klein, and Bandolino. They also merchandise licensed brands from Tommy Hilfiger, Givenchy and Espirit. They sold their holding in Barney's [a high-end retailer] last year for a nice profit.
EPS for 2007 were down from 2006 at $1.23 v. $2.28 after reporting just 12 cents/share in the fourth quarter. Value Line's Feb. 8th issue listed a 2008 estimate of $1.60 while the consensus view is currently at $1.42/share. Unless things are substantially worse than these expectations, JNY shares look very attractive now.
The balance sheet is strong [VL's financial strength rating = B++] and as of October they held $109MM in cash. LT debt was just 27% of Capitalization. The $0.14 quarterly dividend is well covered and provides a current yield of 3.68% - better than most CDs available today. The payout was initiated in 2003 and has been raised each year since -climbing from $0.16 to $0.56 annually over four years.
The company has been retiring shares. Ater peaking at 147.1MM shares outstanding in 2002 the float has been reduced to about 85MM as of year-end 2007.
Jones's 10-year median P/E has been 14X and Value Line assumes that to be a good guide for their 3 - 5 year view as well. A return to that 14 multiple on the $1.42 consensus view for this year would lead to a share price of $21.50 or + 41% on top of their nice 3.69% dividend.
Is this reasonable? Sure. JNY shares hit highs of $35.50 - $47.40 in every single calendar year from 1998 through 2007. Until last summer's stock market meltdown the absolute LOW prices for JNY shares had been $20.10 - $33.00 during the 8 1/2 years from 1999 through mid-year 2007. These shares were over $18 as recently as February 13th- just 2 days ago. Any rebound at all will result in great gains due to the extraordinarily depressed price right now.
Three of our Gurus own JNY currently:
Richard Pzena, Robert Olstein and Hotchkis & Wiley.
All are fine value investors and each of them increased their JNY holdings since last summer.
I'm a buyer today looking for a 40% - 100% move up over the next 12 - 24 months knowing full well that everybody hates this group right now. In a supply and demand world you get the best bargains when most others are selling in despair.
Yield = 3.69% 52-week range: $12.10 - $34.73
Shares of companies in pretty much the entire fashion industry has been pounded on recession fears. As such, many fine businesses are being offered at exceptionally cheap prices right now. A very good one in the area is Jones Apparel Group.
Jones Apparel designs and markets ladies clothing and footwear under a number of well known brand names including- Jones New York, Evan-Picone, Norton McNaughton, Gloria Vanderbuilt, Erika, Kasper, Nine West, Easy Spirit, Enzo Angiolini, l.e.i., Anne Klein, and Bandolino. They also merchandise licensed brands from Tommy Hilfiger, Givenchy and Espirit. They sold their holding in Barney's [a high-end retailer] last year for a nice profit.
EPS for 2007 were down from 2006 at $1.23 v. $2.28 after reporting just 12 cents/share in the fourth quarter. Value Line's Feb. 8th issue listed a 2008 estimate of $1.60 while the consensus view is currently at $1.42/share. Unless things are substantially worse than these expectations, JNY shares look very attractive now.
The balance sheet is strong [VL's financial strength rating = B++] and as of October they held $109MM in cash. LT debt was just 27% of Capitalization. The $0.14 quarterly dividend is well covered and provides a current yield of 3.68% - better than most CDs available today. The payout was initiated in 2003 and has been raised each year since -climbing from $0.16 to $0.56 annually over four years.
The company has been retiring shares. Ater peaking at 147.1MM shares outstanding in 2002 the float has been reduced to about 85MM as of year-end 2007.
Jones's 10-year median P/E has been 14X and Value Line assumes that to be a good guide for their 3 - 5 year view as well. A return to that 14 multiple on the $1.42 consensus view for this year would lead to a share price of $21.50 or + 41% on top of their nice 3.69% dividend.
Is this reasonable? Sure. JNY shares hit highs of $35.50 - $47.40 in every single calendar year from 1998 through 2007. Until last summer's stock market meltdown the absolute LOW prices for JNY shares had been $20.10 - $33.00 during the 8 1/2 years from 1999 through mid-year 2007. These shares were over $18 as recently as February 13th- just 2 days ago. Any rebound at all will result in great gains due to the extraordinarily depressed price right now.
Three of our Gurus own JNY currently:
Richard Pzena, Robert Olstein and Hotchkis & Wiley.
All are fine value investors and each of them increased their JNY holdings since last summer.
I'm a buyer today looking for a 40% - 100% move up over the next 12 - 24 months knowing full well that everybody hates this group right now. In a supply and demand world you get the best bargains when most others are selling in despair.
