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Guess (GES): In Need of a Fashion Makeover

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The fashion brand GuessΒ GESΒ has been struggling in recent years, unable to move its stock price higher. Unfortunately, the current outlook is not much improved as sales are forecast to remain flat in the coming years, and earnings estimate revisions are decidedly lower, giving the stock a Zacks Rank #5 (Strong Sell) recommendation.

Guess, an American fashion brand with a reputation for trendy and edgy youthful designs, has seen its stock price stagnate over the past decade. Hovering around a 5% decline, it lags behind both the industry and the broad market returns. Despite this, the company has managed to maintain a hefty 5.6% dividend yield since 2008.

The poor industry performance speaks to the inherent challenges associated with the fashion industry. Because trends regularly come and go, it is hard for the brands to maintain steady and enduring sales growth.

Zacks Investment Research
Image Source: Zacks Investment Research

Sales this year and next are expected to continue mostly unchanged, with FY24 expecting 2.2% YoY growth and FY25 forecasting 1.9% YoY growth. With no sales growth prospects, I think it is likely that Guess stock will continue to languish as is has the last decade.

Zacks Investment Research
Image Source: Zacks Investment Research

This year has been an exceptional one in the stock market, and thus there are a litany of exciting companies to pick from. This makes Guess a stock that is very much worth avoiding, as it has few if any bullish catalysts currently.

However, Guess does have a well-known brand, and still does over $2.7 billion in annual sales indicating it still maintains some relevance in the fashion world. Furthermore, it is trading at a forward earnings multiple of 8x, which is below the industry average of 14.6x and its 10-year median of 17.5x.

Thus, if Guess can instigate a growth campaign and sway analysts to improve earnings estimates, it could at some point be an interesting investment. However, for now investors should look elsewhere for opportunities.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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