Click to Enlarge Earnings Date: Aug. 19
YTD Return: 32%
Guess (GES) is expected to post earnings of 36 cents per share for the most recent quarter — a number that has held steady for the past 90 days. Investors also think highly of GES, driving shares up more than double the S&P 500’s return for the month before Tuesday’s slip, and up 36% for the year-to-date.
The company has beat estimates in the last two quarters, too, posting an especially noticeable blowout in the most recent period. While analysts were hoping for earnings of 8 cents per share, Guess nearly doubled that with a 14-cent profit.
Of course, that could come back to bite Guess if investors hike their expectations for something more spectacular than an earnings match, especially given GES’ froth. How much froth? Well, Standpoint Research downgraded the stock from “buy” to “hold” back in May, saying Guess was fairly valued.
Investors kept buying, though, and now GES trades at 16 times next year’s earnings, vs. unimpressive five-year annual growth expectations of less than 7%. Plus, its $33 pricetag already dwarfs the median analyst price target.
With that in mind, I’m a bit wary of the coming earnings report, especially considering many think the market as a whole is set to take a breather. The slightest slip could spark a selloff.