Men's Wearhouse, which sells discounted suits and tailored clothing , was on the ropes in the 1990s when blue jeans, polo shirts and casual Fridays ruled the office. But the Texas company spent its time in the wilderness gaining market share from other menswear retailers. Now, corporate attire is dressier again, so Men's Wearhouse stock (symbol MW) looks spiffy, says Stifel Nicolaus analyst Richard Jaffe.
Men's Wearhouse is best known for its commercials starring bearded CEO George Zimmer and his pitch line, "You're going to like the way you look. I guarantee it." But it was the stock, not the wardrobe, that turned heads when Men's Wearhouse beat average analysts' estimates handily for the quarter ending January 28, according to Thomson First Call. The strong performance -- 60 cents a share against forecasts of 53 cents -- prompted Jaffe to raise his estimate by 28 cents for the year ending January 2007, to $2.34 per share. He also bumped up his target price by $4, to $42. Jaffe rates the stock "buy."
There's more here than suits. Jaffe cites improved profit margins from its private-label business, growth in the number of stores and a robust marketing and loyalty program. And, on prom night, Men's Wearhouse hopes to be king. Tuxedo rentals, a very high-margin business, will be a boost during the upcoming spring quarter, Jaffe says.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Clothes aren't the only thing discounted at Men's Wearhouse. The stock, recently $36, trades for 16 times Thomson First Call's average 2006 earnings estimate of $2.25 per share. Jaffe expects profits to grow 13% to 15% annually over the next several years, so the stock is reasonably priced.
--Thomas M. Anderson
-
Is Inflation Crimping Your Holiday Travel? Join the CrowdBankrate survey says 83% of holiday travelers are changing their travel plans due to inflation. Here's how to save on your own travel.
-
Why Pfizer Stock Is Lower After a Beat-and-Raise QuarterPfizer stock is down Tuesday even after the drugmaker reported higher-than-expected Q3 earnings and raised its full-year outlook.
-
Fed Goes Big With First Rate Cut: What the Experts Are SayingFederal Reserve A slowing labor market prompted the Fed to start with a jumbo-sized reduction to borrowing costs.
-
Stock Market Today: Stocks Retreat Ahead of Nvidia EarningsMarkets lost ground on light volume Wednesday as traders keyed on AI bellwether Nvidia earnings after the close.
-
Stock Market Today: Stocks Edge Higher With Nvidia Earnings in FocusNvidia stock gained ground ahead of tomorrow's after-the-close earnings event, while Super Micro Computer got hit by a short seller report.
-
Stock Market Today: Dow Hits New Record Closing HighThe Nasdaq Composite and S&P 500 finished in the red as semiconductor stocks struggled.
-
Stock Market Today: Stocks Pop After Powell's Jackson Hole SpeechFed Chair Powell's Jackson Hole speech struck a dovish tone which sent stocks soaring Friday.
-
Stock Market Today: Stocks Drop Ahead of Powell's Jackson Hole SpeechSentiment turned cautious ahead of Fed Chair Powell's highly anticipated speech Friday at the Jackson Hole Economic Symposium.
-
Stock Market Today: Stocks Rise After Jobs Data Lifts Rate-Cut OddsPreliminary data from the Bureau of Labor Statistics shows job growth was lower than previously estimated.
-
Stock Market Today: Stocks Snap Lengthy Win StreakThe recent stock market rally ran out of steam Tuesday as sentiment turns cautious ahead of Jackson Hole.
