On Monday, B.Riley raised the price target for Guess (NYSE: NYSE:GES) shares from $33.00 to $37.00, while maintaining a Buy rating on the stock. This adjustment follows the company's fourth-quarter revenue and EBITDA surpassing both guidance and analyst expectations.
Guess reported a fourth-quarter revenue of $891 million and EBITDA of $145 million, exceeding the projected figures of $867 million and $140 million, respectively, and also outperforming B.Riley's own estimates of $857 million in revenue and $140 million in EBITDA.
The firm highlighted that, excluding 2021, the gross margin (GM) rate of 45.4% for the fourth quarter of 2023 was the highest since 2009. Additionally, the EBITDA of $145 million for the same period was the highest dollar level achieved since 2011. Looking ahead to the fiscal year 2024, Guess has guided an increase in revenue between 11.5% and 13.5%, with operating income expected to rise by up to 5% at the high end of the forecast.
B.Riley's analysis suggests there could be further upside to the operating income guidance if Guess achieves the higher end of its revenue guidance. The recent closure of the rag & bone acquisition on April 3 is also expected to contribute positively to Guess's financials.
The firm anticipates that rag & bone will add approximately $230 million in revenue and $10 million in EBITDA for fiscal year 2024. Furthermore, the EBITDA contribution from rag & bone could exceed $20 million in fiscal year 2025.
InvestingPro Insights
In light of B.Riley's recent price target increase for Guess, it's important to consider additional insights that could impact investor decisions. According to InvestingPro data, Guess has a market capitalization of $1.62 billion and is trading at an adjusted P/E ratio of 7.76, which indicates a potentially undervalued stock relative to near-term earnings growth. Additionally, the company's PEG ratio stands at a low 0.2, suggesting that its stock price could be attractive considering its earnings growth rate.
InvestingPro Tips highlight that Guess has a strong track record of maintaining and raising dividends, with a dividend yield of 3.95% and a significant dividend growth of 33.33% over the last twelve months as of Q4 2024. This consistent return to shareholders, combined with a robust 70.27% one-year price total return, may appeal to both income and growth investors. Moreover, the company has demonstrated a solid financial performance with a 3.32% revenue growth over the same period.
For those considering additional analysis, there are more InvestingPro Tips available, providing deeper insights into Guess's financial health and stock performance. By using the coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking valuable information to guide investment decisions.
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