Rising earnings estimates on the back of strong second quarter
results - including an 85.7% earnings surprise - helped
G III Apparel Group Inc.
) achieve a Zacks #1 Rank (Strong Buy) on September 11, 2012. This
apparel manufacturer has delivered positive earnings surprises in
two of the last four quarters, and met the estimates in one, with
an average beat of 24.3%.
With a solid year-to-date return of 44.5% and a history of
beating quarterly earnings estimates, this stock offers an
attractive investment opportunity.
The Rank Driver
Better-than-expected second quarter earnings of fiscal 2013,
robust sales growth year-to-date, acquisition of the leading luxury
resort brand, Vilebrequin, and a raised fiscal 2013 outlook - are
the primary rank drivers for this stock.
G III Apparel reported its second quarter 2013 results on
September 5, 2012, with earnings per share of 13 cents,
beating the Zacks Consensus Estimate of 7 cents by 85.7% and
year-ago earnings of 9 cents by 44.4%. Additionally, the quarterly
earnings per share came ahead of the company's guided range of 4
cents to 8 cents.
Net sales surged 16.5% and 9.4% year over year to $229.4 million
and $251.5 million, in the first and second quarter of fiscal 2013,
respectively. The increase in net sales is driven by significant
comps growth of 6.3% and 12.7% in first and second quarter of 2013
in dresses, sportswear, suits, handbags, team sports and specialty
On August 7, 2012, GIII Apparel acquired a leading luxury resort
brand, Vilebrequin at a consideration of about $106.2 million.
Management believes that this merger will prove to be accretive to
the company's top line as the brand operates a high operating
Based on strong second quarter results, the company raised its
outlook for fiscal 2013. G-III now anticipates earnings per share
between $2.68 and $2.78, up from the previously forecasted range of
$2.62 to $2.72. Net sales are now expected to be $1.41 billion,
versus the earlier projection of $1.35 billion. On an adjusted
basis, the company expects earnings per share in the range of $2.74
Earnings Estimate Revisions
The Zacks Consensus Estimate for fiscal 2013 increased 4.4% to
$2.83 per share based on 5 out of 5 upward estimate revisions over
the last 30 days. The current estimate implies a year-over-year
growth of 14.9%.
For fiscal 2014, 5 out of 6 estimates were revised higher over
the same time frame, lifting the Zacks Consensus Estimate by 4.5%
to $3.22 per share.
G-III Apparel currently trades at a forward P/E of 12.68x,
reflecting a 31.3% discount to the peer group average of 18.45x. On
a price-to-book basis, shares trade with a 12.1% discount at 1.97x.
The company's compelling fundamentals are well supported by its
long-term estimated EPS growth rate of 20.0% versus 13.7% for the
The company has a trailing 12-month ROE of 14.0%, above the peer
group average of 11.8%. This implies that the company reinvests its
earnings more efficiently than its peer group.
About the Company
Based in New York, G-III Apparel Group is a leading designer and
distributor of women's and men's apparel in the United States. The
company deals in outerwear, dresses, sportswear, swimwear,
beachwear and women's suits, as well as handbags and luggage. The
company has a market capitalization of about $717.9 million.
Other Zacks #1 Rank retail stocks include
Hain Celestial Group Inc.
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