G-III Apparel Group Ltd.
) hit its 52-week high mark of $37.92 on September 14, following a
solid fiscal second-quarter report that included an earnings
surprise of 85.7% and an enhanced outlook for fiscal 2013. This
apparel manufacturer has gained more than 55.0% since last month.
The future for GIII looks bright, based on impressive booking for
the key fall season, unit growth expansion, strong demand for its
core products, acquisition of the leading luxury resort brand
Vilebrequin, and other novel business initiatives. A year-to-date
return of 49.4% and rising earnings estimates indicate significant
potential for this Zacks #1 Rank (Strong Buy) stock.
Fabulous Quarter, Forecast Raised
On September 5, G-III Apparel Group reported fiscal second-quarter
2013 earnings of 13 cents per share, breezing past the Zacks
Consensus Estimate of 7 cents and above the company's guided range
of 4 cents to 8 cents.
Net sales surged 9.4% year over year to $251.5 million, driven by
double-digit comps growth in dresses, sportswear, suits, handbags,
team sports and specialty retail operations. The significant growth
in net sales was chiefly aided by improved performances from
wholesale licensed apparel (up 13.0% year-over-year) and retail
operations (up 16.0%), partially offset by a dip of 4.7% in the
wholesale non-licensed segment.
Gross margin expanded 130 basis points (bps) to 29.8%, due to a
decline in cost of sales as a percentage of revenue. Margins at the
wholesale license segment advanced 70 bps to 26.2%, while the
wholesale non-licensed segment rose 90 bps to 24.7%. Moreover,
gross margin at retail operations improved 290 bps to 48.0%.
For the third quarter of 2013, G-III expects earnings per share
between $2.25 and $2.35 with net sales of $510 million to $570
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 Estimates Surge
Estimates for its current fiscal year and next have each increased
over the past month. The Zacks Consensus Estimate for fiscal 2013
grew nearly 4.4% to $2.83 per share in the last 30 days as all 5
estimates moved up, representing year-over-year growth of 14.9%.
The Zacks Consensus Estimate for fiscal 2014 advanced 4.5% to $3.22
as 5 of 6 estimates moved higher. This signifies a year-over-year
improvement of about 13.9%.
G-III Apparel currently trades at a forward P/E of 13.1x,
reflecting a 29.9% discount to the peer group average of 18.7x. On
a price-to-book basis, shares trade with a 14.3% discount at 2.0x.
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.
Charts Show Vigor
Shares have shown a year-to-date return of 49.4%, and recently
reached a 52-week high of $37.92.
Moreover, the company's shares have been trading above the 50 and
200-day moving averages since August 6, this year. G-III has a
market cap of $742.4 million. Its average trade volume is decent at
139K. The company has also outperformed the S&P 500 Index since
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 sells its apparel and other products under proprietary
brands, including the Andrew Marc, Marc New York, Jessica Howard,
Black Rivet, G-III, Eliza J, Marvin Richards, Siena Studio, Winlit,
Marc Moto, G-III Sports by Carl Banks, and G-III for Her, as well
as under various licensed and private label brands. G-III Apparel
offers its products to department, specialty, and mass merchant
retail stores, as well as upper tier stores and catalogs primarily
in the United States, Canada, Europe, and the Far East.
Want More of Our Best Recommendations?
Zacks' Executive VP, Steve Reitmeister, knows when key trades are
about to be triggered and which of our experts has the hottest
hand. Then each week he hand-selects the most compelling trades and
serves them up to you in a new program called
G-III APPAREL (GIII): Free Stock Analysis
To read this article on Zacks.com click here.