Guess? Inc (GES, Financial) has recently experienced a significant daily loss of -12.27%, yet it stands in contrast with a 3-month gain of 15.89%. These fluctuations beg the question: Is Guess? (GES) fairly valued in the market? With an Earnings Per Share (EPS) of $2.13, investors are keen on understanding the stock's intrinsic value. This article delves into a thorough valuation analysis to determine whether Guess? Inc (GES) is trading at a fair price, guiding readers through the nuances of its financial standing.
Company Introduction
Guess? Inc designs and sells apparel and accessories infused with European fashion aesthetics, operating under brands such as Guess, Marciano, and G by Guess. With a diverse portfolio spanning Americas Retail, Americas Wholesale, Europe, Asia, and licensing, Guess? generates its highest revenue from the Europe segment. The company's stock price currently stands at $21.29, with a market cap of $1.10 billion, inviting a comparison with the GF Value of $22.41—a measure of its estimated fair value.
Summarize GF Value
The GF Value is a unique assessment of the intrinsic value of a stock, factoring in historical trading multiples, a GuruFocus adjustment for past performance, and future business projections. This value suggests a fair trading level for the stock, with significant deviations indicating potential overvaluation or undervaluation. Guess? (GES, Financial) currently appears fairly valued, with the market cap of $1.10 billion closely aligning with the GF Value. This equilibrium suggests that long-term returns may closely track the company's business growth.
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Financial Strength
Investors must assess a company's financial strength to avoid potential capital loss. Guess? Inc's cash-to-debt ratio of 0.24 places it in a less favorable position than many of its industry peers. GuruFocus awards Guess? a financial strength rating of 5 out of 10, indicating a moderately stable balance sheet.
Profitability and Growth
Profitability is a key indicator of a company's investment safety. Guess? has maintained profitability for 8 out of the past 10 years, with a revenue of $2.70 billion and an Earnings Per Share (EPS) of $2.13 over the past twelve months. Its operating margin of 8.55% outperforms a majority of its competitors. In terms of growth, Guess?'s annual revenue and EBITDA growth rates are fairly competitive within the Retail - Cyclical industry.
ROIC vs WACC
An insightful profitability metric is the comparison between Return on Invested Capital (ROIC) and Weighted Average Cost of Capital (WACC). Guess? Inc's ROIC of 11.85 exceeds its WACC of 5.54, indicating the company is effectively generating value for its shareholders.
Conclusion
In summary, Guess? Inc's stock seems to be priced fairly in the market. The company's financial health is stable, with reasonable profitability and competitive growth. Investors interested in a deeper understanding of Guess?'s financials can explore its 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.
