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Sell Yourself, Stakeholder Tells Men's Wearhouse (MW)

NEW YORK (TheStreet) -- After weeks of dancing around bids, an activist investor is turning up the heat on Men's Wearhouse (MW), urging it to reevaluate its options.

The men's retailer rejected a $2.3 billion, or $48 a share, takeover bid from Jos. A Bank Clothiers (JOSB) in October on the belief the unsolicited offer undervalued the brand. Men's Wearhouse rejected its suitor for a second time earlier this week when Jos. A Bank said it was willing to up its offer if it had access to the company's non-public financial information.

Investment firm Eminence Capital urged the Houston-based company to reevaluate its stance on a buyout from Jos. A Bank or any additional interested party, reports CNBC. Adding weight to its request, the hedge fund disclosed it had purchased a 9.8% stake in the business in a Securities and Exchange Commission filing Thursday.

Men's Wearhouse shares spiked 7.1% to $45.43, while Jos. A Bank gained 1.8% to $48.34.

TheStreet Ratings team rates Men's Wearhouse as a Buy with a ratings score of A. The team has this to say about their recommendation:

"We rate Men's Wearhouse Inc (MW) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, solid stock price performance, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The gross profit margin for MENS WEARHOUSE INC is rather high; currently it is at 51.12%. Regardless of MW's profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 6.63% trails the industry average.
  • MW, with its decline in revenue, underperformed when compared the industry average of 19.6%. Revenues dropped 2.3% from the same quarter a year earlier. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Specialty Retail industry and the overall market, Men's Wearhouse Inc's return on equity is below that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: MW Ratings Report

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