[Note: Guess’ FY’25 ended Feb 2025]
Guess Stock (NYSE: GES) skyrocketed 30% on March 17 after the corporate introduced a $13.00 per share takeover bid from WHP International. The proposed acquisition, topic to assessment by a particular committee, would see WHP International purchase all excellent shares besides these held by Guess’ co-founders Paul and Maurice Marciano, and CEO Carlos Alberini, who collectively personal round 43% of the corporate. The sudden spike is a much-needed respite for traders, who’ve seen Guess’ inventory battle in current months. Notably, Guess has an present partnership with WHP International, having acquired the Rag & Bone trend model in April 2024. This strategic transfer has enabled Guess to increase its presence within the luxurious market, working Rag & Bone shops and distributing the model by high-end retail channels globally.
Guess inventory has declined by 37% because the begin of 2024, underperforming the broader S&P 500 index, which has risen by 14%. This underperformance is especially on account of declines within the Americas phase, and elevated stock ranges and markdowns which have negatively impacted the corporate’s profitability. The broader market volatility triggered by the Trump administration’s new tariff implementations, and escalating commerce tensions additionally contributed to the decline. The important thing elements influencing the downward motion embody:
- a 42% fall within the firm’s P/S ratio to 0.22 now, versus 0.38 in FY 2023; partly offset by
- a ten% rise within the firm’s income from $2.7 billion in FY 2023 to $3 billion (final twelve months); and
- a 6% fall in complete shares excellent to 54 million.
We’ll delve into the specifics of those elements. Our dashboard on Why Guess Stock Moved has extra particulars. If you would like an upside with a smoother journey than a person inventory, think about the High-Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.
Picture by Clau M from Pixabay
Guess Revenues had been pushed by strong gross sales in European markets, which account for over 50% of complete revenues, however offset by declines in North American retail segments. The current acquisition of Rag & Bone supplied a further income increase, contributing to the corporate’s top-line progress.
The retailer has been grappling with declining foot visitors in its brick-and-mortar shops within the Americas, notably in North America, for a number of years. Regardless of the area accounting for over 33% of the corporate’s complete revenues, administration goals to scale back this contribution to round 25% sooner or later. To attain this aim, Guess is rebalancing its American retail and wholesale companies, closing underperforming shops, enhancing product choices, and bolstering its on-line presence by strategic advertising and marketing initiatives, superstar endorsements, and focused promotions.
Guess’ working margin expanded to 9.5% in FY 2024, up from 9.2% in FY 2023, driving adjusted earnings progress to $3.14 from $2.74, aided by a discount in excellent shares. Nevertheless, the corporate anticipates a year-over-year decline in EPS for FY 2025, primarily on account of elevated advertising and marketing investments in worldwide enlargement and Rag & Bone integration. As well as, the repeated downward revisions to steerage to date this 12 months have negatively impacted the inventory, leading to a decline within the price-to-sales ratio from 0.4x in FY 2023 to 0.2x presently, reflecting investor warning forward of the full-year outcomes.
The lower in GES inventory over the past 4-year interval has been removed from constant and has largely been as risky because the S&P 500. Returns for the inventory had been 7% in 2021, -9% in 2022, 18% in 2023, and -30% in 2024. The Trefis Excessive High quality (HQ) Portfolio, with a group of 30 shares, is much less risky. And it has comfortably outperformed the S&P 500 over the past 4-year interval.
With the present financial uncertainty surrounding rate of interest cuts and ongoing commerce disputes, will GES inventory proceed to underperform the S&P 500 within the subsequent 12 months, or will it stage a powerful rebound? From a valuation perspective, we imagine GES has appreciable upside potential.
We estimate Guess Valuation to be $17 per share, representing a possible 33% upside from present ranges. Guess inventory is presently buying and selling at $13, with a price-to-sales ratio of 0.22x, under its four-year common of 0.4x. Notably, the common analyst value estimate of $18 for Guess additionally displays an almost 40% upside, implying that the inventory has extra room for progress.
| Returns | Mar 2025 MTD [1] |
2025 YTD [1] |
2017-25 Whole [2] |
| GES Return | 24% | -10% | 59% |
| S&P 500 Return | -5% | -4% | 153% |
| Trefis Bolstered Worth Portfolio | -6% | -8% | 552% |
[1] Returns as of three/18/2025
[2] Cumulative complete returns because the finish of 2016
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The views and opinions expressed herein are the views and opinions of the creator and don’t essentially replicate these of Nasdaq, Inc.
