Guess Stock (NYSE: GES) has been performing well in 2024, with its stock price increasing by 14% year-to-date to around $27, outperforming the S&P 500. This increase is attributed to an upbeat Q4 earnings report and the acquisition of Rag & Bone into its portfolio. Guess and WHP Global have agreed to acquire Rag & Bone, with Guess owning all of the operating assets but sharing 50% of the brand value with WHP Global. This acquisition marks Guess’ first in its history and is expected to further strengthen the company’s position in the fashion industry.
Despite a challenging macroeconomic environment, Guess reported a 9% year-over-year increase in sales to around $891 million in Q4. The company saw revenue growth across its various segments, including American Wholesale at 44% y-o-y, Asia at 18% y-o-y, Europe at 9% y-o-y, Licensing at 15% y-o-y, and Americas Retail at 1% y-o-y. Adjusted earnings also rose 16% y-o-y to $2.01 per share, with improved gross margins and operating margins. For fiscal 2025, Guess expects further revenue growth of 11.5% to 13.5% y-o-y, along with an adjusted operating margin between 7.5% and 8.5% and adjusted earnings per share of $2.56 to $3.00.
GES stock has shown little change over the past three years, moving from $25 in early 2021 to around $26 currently. While it has underperformed the S&P 500 during this period, with returns of 5% in 2021, -13% in 2022, and 11% in 2023, the overall performance has been lackluster compared to the index. Given the current uncertain macroeconomic environment, with high oil prices and elevated interest rates, there is speculation on whether Guess may face a similar situation as in 2021 and 2023 and underperform the S&P over the next 12 months or see a strong jump.
Analysts forecast Guess revenues to reach $3.1 billion for fiscal year 2025, up 13% y-o-y, with earnings per share expected to be $2.86. Based on these forecasts, Guess’ valuation is revised to $32 per share, indicating that the stock may be currently undervalued. It is also important to compare Guess with its peers to understand how the company stacks up in terms of key metrics and performance. By analyzing Peer Comparisons, investors can gain insights into how Guess is faring within the industry.
Overall, Guess’ recent performance and strategic acquisitions have positioned the company for growth in the coming years. With a positive outlook for fiscal 2025 and potential for further expansion, Guess stock may present a compelling investment opportunity for those looking to capitalize on the company’s potential and the evolving fashion retail landscape.
