What To Expect From Guess’ Stock After Q2 Results?

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[Note: Guess’ FY’22 ended on Jan 29, 2022]

Guess stock (NYSE: GES), a retailer that designs, markets, distributes, and licenses apparel and accessories for men, women, and children, is scheduled to report its fiscal second-quarter results on Wednesday, August 24. We expect GES stock to likely trade higher post fiscal Q2 results with revenues coming in line and earnings beating estimates marginally. Guess has seen improved financial performance in Q1 2023, particularly after the Covid-19 pandemic sent its stock lower. There might be volatility in the company’s performance going forward, but overall, things are looking good. For the full year FY 2023, the company expects 4% year-over-year (y-o-y) revenue growth and an operating margin above 10%.

Our forecast indicates that the company’s valuation is around $20 a share, which is around 6% higher than the current market price. Look at our interactive dashboard analysis on Guess’ Earnings Preview: What To Expect in Fiscal Q2? for more details.

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(1) Revenues expected to be in line with consensus estimates

Trefis estimates GES’ FQ2 revenues to be around $638 million, in line with the market expectations. In Q1, the company’s revenue grew 14% y-o-y to around $594 million. Under the Americas Retail segment of the company, retail comparable sales helped to push revenue up by 3%. Even more impressive was the 50% gain in the Americas Wholesale segment, while licensing revenues grew by 23%. Guess has given up its pursuit of younger teenage consumers and has moved toward consumers in their 20’s and early 30’s. The company has taken off in Europe, and that has to do with lifestyle and also excellent marketing.

2) EPS likely to be above consensus estimates marginally

GES’ FQ2 earnings per share (EPS) is expected to be 46 cents per Trefis analysis, marginally ahead of the consensus estimate. In Q1, the retailer’s adjusted operating margin increased to 7.0%  from 5.0% for the same prior-year quarter, driven primarily by overall leveraging of expenses, partially offset by higher store labor costs in Americas Retail and unfavorable currency impact. On the bottom line, the company earned $0.24 per share in Q1, compared to $0.21 in the year-ago quarter. In addition, the retailer’s EBITDA also rose y-o-y, climbing from $39 million in Q1 2022 to $51.5 million in Q1 2023.

(3) Stock price estimate higher than the current market price

Going by our Guess’ Valuation, with adjusted earnings per share (EPS) estimate of around $3.06 and a P/E multiple of almost 6.6 in fiscal 2023, this translates into a price of $20, which is around 6% higher than the current market price.

It is helpful to see how its peers stack up. GES Peers shows how Guess’ stock compares against peers on metrics that matter. You will find other useful comparisons for companies across industries at Peer Comparisons.

With inflation rising and the Fed raising interest rates, Guess stock has fallen 20% this year. Can it drop more? See how low can GES stock go by comparing its decline in previous market crashes. Here is a performance summary of all stocks in previous market crashes.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns Aug 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 GES Return 0% -20% 57%
 S&P 500 Return 0% -13% 85%
 Trefis Multi-Strategy Portfolio -1% -14% 236%

[1] Month-to-date and year-to-date as of 8/23/2022
[2] Cumulative total returns since the end of 2016

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