Comparing Wall Street’s outlook on Guess with peers
The five analysts that cover Guess (GES) gave the stock a 2.6 on a scale where one is a “strong buy” and five is a “strong sell.” The company has a better rating than apparel peers Gap (GPS) and Abercrombie & Fitch (ANF), which are rated 3.0 and 2.9, respectively. Urban Outfitters (URBN) and American Eagle Outfitters (AEO), however, have a better ranking of 2.5.
Two of the five investment firms suggest buying the stock. B. Riley upgraded Guess from a “neutral” to a “buy” rating at the end of February, citing strong earnings upside and cheap valuations. Three firms including KeyBanc and Cowen & Company have a “hold” rating on Guess. There aren’t any “sell” recommendations on the company.
Guess is currently trading at $25.45, close to its 52-week high price. Wall Street doesn’t foresee any further upside for Guess this year. The company has been assigned an average target price of $19.64, which indicates a 23% downside over the next 12 months.
The stocks of most apparel retailers are trading close to their highs. As a result, share prices of most of the stocks are projected to fall over the next year. ANF, URBN, and AEO, for instance, have downsides of 17%, 5%, and 7% from their current trading prices.
Guess is currently trading at a one-year forward price-to-earnings ratio of 26x versus a three-year average of 23x. It trades at a premium to apparel retailers Gap at 12x, Urban Outfitters at 18.7x, and American Eagle Outfitters at 15.5x. Abercrombie & Fitch at 34x is among the few apparel players that are expensive compared to Guess.
Investors wanting to get exposure to Guess through ETFs can consider the SPDR S&P Retail ETF (XRT), which invests 2% of its holdings in Guess.