Guess?, Inc. (NYSE:GES)

So what did I buy for $26.52? I bought a company that has $496 million in cash zero debt which translates into a net cash position of $5.64 PER SHARE. So the better question is, what did I buy for $20.88? ($26.52-$5.64). I bought a company with ZERO debt, a history of returns on equity and returns on capital in the 20-28% range (awesome), still run by the two brothers that founded the company, (each brother owns about 14% of the outstanding shares), for a cash adjusted earnings yield of 13.7% and a cash adjusted free cash flow yield of 12.5%.

Yes, clothing is not exactly the most profitable business, and yes GES’s growth has been slowing, but with the sky high ROC, very low valuation, and two managers who’s interests are uncommonly aligned with shareholders…I’m going to pick GES anyway. Add in the 3% dividend yield, and the fact that GES is selling for a slight 6% discount to their Graham Number which is around $28…and I think you have a pretty solid long-term pick.

Cheap

Guess derives about half of its revenue from North America and half from overseas. Asia has been a big growth driver recently posting annual growth rates over 25%. Guess has a significant presence in Europe (especially Italy) which seems to have investors scared. However, growth in Owner Earnings paint a pretty rosy picture. The 5 year compound annual growth rate is 10% while the 10 year growth rate is 22%. Contrast this with a reverse DCF suggesting that the market is assuming -5% annual growth at the current price and GES seems cheap. With $3.20 in cash per share, no debt and a 3.1% dividend yield, GES offers a huge margin of safety.

Solid brand with low P/E, decent growth, high dividend, low payout ratio, and plenty of cash.

has taken steps to clear out excess inventory before holiday season should keep margin up help drive coustomers in stores in search of fashionable items If it can leverage its new inventory in Oct hopefuly the Co will be set for higher 2012

near the low end of the 52wk and tmfbabo

Had my eye on GES for a while - this most recent price drop puts it on the buy list for portion #1. A drop of another 10% would mean portion #2.

It has a few more dollars to fall before it's a buy. Looking to get it 1st week of September.

After the 22% drop yesterday it's close to it's 52 week low and yielding 3.08%. Looks like a pretty good deal.

Strong stock buyback history, founder owners, hit hard because of Europe exposure, good dividend, strong brand.

Although Guess has achieved >10% revenue and FCF growth over the past decade, its European exposure has has become the only thing many are paying attention to. Even with a severely dinged European segment, GES generates a ton of cash. It has protected its brand sufficiently and maintained relevence for more than 30 years. Led by passionate owner-managers, I suspect the brand will make a run at another 30. At<3.5x EV/EBITDA, the price of admission is low.

Over-valued on both relative and on discounted cash flow basis. European uncertainty risk set me to lower the target selling price to $40.

Check out the full analysis here: http://fundamental-stockanalysis.blogspot.ca/2012/04/guess-investment-report-ges-under.html

12/18

looking for growth with a very attractive price

Weakening consumer sentiment and buying power. Not to mention it's fundamentals are weaking as well. No real reason to purchase since it isn't even considered cheap from a value standpoint.

HG

Guess? Seems to be an anomaly in the apparel business: A business with solid growth numbers that isn't trading at a high earnings multiple. Add to this a 2% yield? It's a buy.

looks like an overcorrection with the 12% drop

tookabeatin' but will rise again