Jos. A. Bank
), Zacks Rank #5 (Strong Sell), is an apparel retailer
specializing in menswear. Although their clothes can
help make a fashion statement, the stock is not likely to look
good in your portfolio.
Recent profit warning:
On August 15
, the company guided its Q2 profit outlook lower. Earnings
per share were seen somewhere between $0.49 and $0.53 compared to
a Zacks Consensus Estimate of $0.66. In the press release,
Jos. A. Bank noted that customers did not respond well to
promotion and total sales declined 11% in the quarter.
The profit warning comes in the wake of a longer term
downtrend in gross margin. Gross margin peaked at 62.93% in the
April 2011 quarter and has since fallen to 57.78% in the April
2013 quarter. Margins have compress to levels last seen in
A struggle to post positive earnings
Over the last ten quarters, the company has posted four
positive earnings surprises and five negative earnings surprises
meeting estimates one time. The inconsistent track record
is unappealing for investors and highlights execution risk in a
Earnings estimates are falling:
As the price earnings estimate revision chart displays,
earnings estimates have been steadily declining, and the
downtrend is unlikely to stall given the company's recent
Valuation is unexciting:
The stock is trading about 13.7 times expected 12 month
forward earnings per share. This is about 1.0 above the ten
year median. The stock is not cheap at a time when there
are questions around the future earnings outlook.
Those who want exposure to the men's apparel space may want to
try on Men's Warehouse (
). It is a Zacks Rank #2 (Buy). Earnings revisions for FY
2013 and FY 2014 have been creeping higher over the past 30
days. The stock is also trading about 13.3 times forward 12
month earnings per share which is about 1.0 under the ten year
median. On a relative basis, it looks more attractive than Jos.
JOS A BANK CLTH (JOSB): Free Stock Analysis
MENS WEARHOUSE (MW): Free Stock Analysis
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