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Men’s
Warehouse (MW)
Company
Description & Developments
The
clothing
company founded in Houston in 1973 has come a long way since its humble
beginnings. Although George Zimmer’s trademark
motto hasn’t changed, (aside from his now distinctly scratchy voice)
the
company’s size, reach and profitability has soared. So has
its stock…
In
a
world where competition for price and business is tough, Men’s
Warehouse is not
only guaranteeing “you’ll like the way you look” but they are honing in
on a
niche market that has become not only price sensitive, but more prudent
and discerning
in their purchases – The middle class.
Recently
the company partnered with designer Vera Wang to design their new
“Black” line
of tuxedos, which is a move to increase visibility and bring a bit more
class
and high fashion to their already respectable lineup.
Anecdotally,
I have noticed new stores popping up in my travels which take me to
several
major cities a month. Personally, I
enjoy my experience there and believe that they sell quality threads at
great
prices. Perhaps I am jaded being an old
Wall Street guy who used to pay for custom suits (in my young and
foolish
days).
As
America (supposedly) gets back to work, the male working populous will
need
some new duds to make an impression and MW should benefit from this as
well.
* Here is a
younger Zimmer offering us his
promise in 1993
Financial
Profile
MW
is trading at about 15.4 times trailing earnings (p/e) and the Zacks
Consensus
Estimate is for that number to drop to 14.3 over the next year (with
the price
here). Last year the company earned
$2.24 and expectations are from those earnings to increase 3% to $2.31
for the
current fiscal year.
They
are ranked 5 out of 47 other companies in their industry, which is not
a bad
showing considering their peers.
Currently,
MW is throwing off a dividend of .48, with a yield of 1.45%.
Obviously as a momentum stock we are looking
for capital appreciation, but a bit of div love never hurts.
Zacks
currently ranks MW with an Outperform rating with a price target of
$36.70.
Earnings
Estimates
Expectations
are for MW to lose 0.12 cents this quarter when they report on March
7th,
down from .79 in EPS they showed last quarter. Following this
quarter earnings are expected
to move back up to .61.
MW
surprised analysts to the upside by 21.54% last quarter. We
have not seen any upward analyst revisions
in the past 30 days for the coming report, but we are still almost two
months
away from the numbers. What I have seen
is upward yearly revisions from 2.20 to a current consensus estimate of
2.31 in
earnings for this year.
These
revisions along with the fundamental and technical analysis gave me
good reason
to add it to our momentum list.
Market
Performance & Techincals
MW
is currently trading just about $4.00 below its 52 week high of
$36.44. Over the past year MW has outpaced the
S&P
500 by 28% and in the past 3 months alone has gained 11.69% against the
index.
Along
with most of the market, the stock pulled back sharply to $24.60 in
August, but
then retested that level again in October before starting its current
trek
higher.
In
the charts you’ll notice that we are in a stock ascending channel, but
the
stock has been consolidating a bit between $31.50 and $33.50.
Strong support comes at the $31.50
level. Look for the breakout above the
recent $34.00 highs for a run.
Jared
A Levy is the Momentum Stock Strategist for Zacks.com. He is also the
Editor in
charge of the market-beating Zacks
Whisper Trader Service.
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