On Tuesday, UBS adjusted its outlook for apparel retailer Guess (NYSE: NYSE:GES), increasing the price target to $26.00 from the previous $25.00, while maintaining a Neutral rating on the company's shares. The firm cited several factors influencing the decision, including challenges in Guess's Americas retail segment and difficult wholesale market conditions that are expected to impact the company's financial year 2025 (calendar year 2024) organic guidance.
Despite these challenges, UBS predicts that the consensus earnings per share (EPS) estimate for Guess's FY25 could rise beyond the current $2.95 forecast. This potential increase is attributed to further information anticipated regarding the company's recent acquisition of the fashion brand rag & bone. The details of this acquisition are not yet factored into the market's estimations, according to UBS.
UBS anticipates that Guess will provide FY25 EPS guidance in the range of $2.90 to $3.20, including the effects of mergers and acquisitions. The firm expects that this guidance will align with market expectations and does not foresee a significant change in investor sentiment toward Guess's stock. Historically, Guess's stock exhibits an average movement of 12.7% around earnings announcements, suggesting a high volatility potential for the upcoming event.
InvestingPro Insights
As Guess, Inc. (NYSE: GES) navigates the retail landscape, the company's financials and market performance offer a mixed bag of signals. According to InvestingPro data, Guess has a market capitalization of $1.37 billion and trades at a P/E ratio of 7.71, reflecting a valuation that could be attractive to investors seeking value in the retail sector. The company's earnings multiple has been adjusted to 7.23 for the last twelve months as of Q3 2024, with a PEG ratio of just 0.14, indicating potential for earnings growth relative to its share price.
Moreover, Guess's dividend yield stands at 4.72%, a noteworthy figure for income-focused investors, especially considering the company has raised its dividend for three consecutive years. This commitment to returning value to shareholders is further evidenced by the fact that Guess has maintained dividend payments for 17 consecutive years, a testament to its financial stability and management's confidence in the company's cash flow.
InvestingPro Tips highlight that Guess is trading at a low P/E ratio relative to near-term earnings growth, which could be an enticing factor for value investors. Additionally, the company's liquid assets exceed short-term obligations, providing a cushion against market uncertainties. For investors looking for comprehensive analysis, there are 9 additional InvestingPro Tips available, which can be accessed with a subscription. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
Investors may also note that the company's stock price is trading near its 52-week high, at 97.1% of the peak value, which could signal confidence among investors or indicate a potential reevaluation of the stock's ceiling. With the next earnings date on March 20, 2024, the market will be watching closely to see if Guess's performance aligns with the positive outlook suggested by these financial metrics and InvestingPro Tips.
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