Critical Analysis: Guess? (GES) versus Wacoal (WACLY)

Guess? (NYSE:GES) and Wacoal (OTCMKTS:WACLY) are both small-cap consumer discretionary companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, dividends, profitability, analyst recommendations, valuation, earnings and institutional ownership.

Profitability

This table compares Guess? and Wacoal’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Guess? 0.10% 8.12% 4.64%
Wacoal 6.16% 5.11% 4.04%



Volatility and Risk

Guess? has a beta of 0.15, indicating that its stock price is 85% less volatile than the S&P 500. Comparatively, Wacoal has a beta of 0.47, indicating that its stock price is 53% less volatile than the S&P 500.

Earnings and Valuation

This table compares Guess? and Wacoal’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Guess? $2.36 billion 0.73 -$7.89 million $0.70 30.34
Wacoal $1.77 billion 1.08 $87.70 million N/A N/A

Wacoal has lower revenue, but higher earnings than Guess?.

Dividends

Guess? pays an annual dividend of $0.90 per share and has a dividend yield of 4.2%. Wacoal pays an annual dividend of $1.37 per share and has a dividend yield of 1.0%. Guess? pays out 128.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Insider & Institutional Ownership

70.8% of Guess? shares are owned by institutional investors. Comparatively, 0.0% of Wacoal shares are owned by institutional investors. 31.3% of Guess? shares are owned by insiders. Comparatively, 0.8% of Wacoal shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations for Guess? and Wacoal, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Guess? 0 3 1 0 2.25
Wacoal 0 0 0 0 N/A

Guess? presently has a consensus price target of $22.00, indicating a potential upside of 3.58%. Given Guess?’s higher possible upside, research analysts clearly believe Guess? is more favorable than Wacoal.

Summary

Guess? beats Wacoal on 9 of the 14 factors compared between the two stocks.

Guess? Company Profile

Guess?, Inc. designs, markets, distributes, and licenses lifestyle collections of apparel and accessories for men, women, and children. It operates through five segments: Americas Retail, Americas Wholesale, Europe, Asia, and Licensing. The company's clothing collection includes jeans, pants, skirts, dresses, shorts, blouses, shirts, jackets, knitwear, and intimate apparel. It also grants licenses to manufacture and distribute various products that complement its apparel lines, such as eyewear, watches, handbags, footwear, kids' and infants' apparel, outerwear, swimwear, fragrance, jewelry, and other fashion accessories. The company markets its products under GUESS, GUESS?, GUESS U.S.A., GUESS Jeans, GUESS? and Triangle Design, MARCIANO, Question Mark and Triangle Design, a stylized G and a stylized M, GUESS Kids, Baby GUESS, YES, G by GUESS, GUESS by MARCIANO, and Gc brand names. It sells its products through direct-to-consumer, wholesale, and licensing distribution channels. As of August 4, 2018, the company directly operated 1,061 retail stores in the Americas, Europe, and Asia. Its licensees and distributors operated an additional 601 retail stores worldwide. The company also offers its products through its retail Websites. Guess?, Inc. was founded in 1981 and is headquartered in Los Angeles, California.

Wacoal Company Profile

Wacoal Holdings Corp. designs, manufactures, and markets women's intimate apparel primarily in Japan. It operates through three segments: Wacoal Business (Domestic), Wacoal Business (Overseas), and Peach John. The company offers foundation garments, including brassieres and girdles; and lingerie, such as slips, bra-slips, and women's briefs. It also designs, manufactures, and sells nightwear, children's underwear, outerwear, sportswear, hosiery, and other apparel and textile goods, as well as provides various other services. In addition, the company engages in the restaurant businesses; cultural and service-related operations; construction of interiors for commercial premises; and production and sale of mannequins. It sells its apparel products on a wholesale basis to department stores, general merchandisers, and other general retailers through directly managed retail stores, catalogue sales, and the Internet. The company was founded in 1946 and is headquartered in Kyoto, Japan.

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