This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Jos A. Bank (JOSB) Looks Like a Million Bucks After Earnings Update

NEW YORK (TheStreet) -- Shares of Men's Wearhouse (MW) and Jos. A. Bank Clothiers (JOSB) popped after news that a buyout deal is not off the table. Eminence Capital, Men's Wearhouse's largest shareholder, confirmed the retailer's CEO Doug Ewert has not ruled out a merger with Jos. A. Bank Clothiers. 

Sharse of Jos. A. Bank had gained 3.4% to $50.19, while Men's Wearhouse was up 3.4% to $47.52.

Sweetening the deal is the former's better-than-expected earnings guidance released on Tuesday. For the third quarter ended Nov. 2, Jos. A. Bank said it expects profit to fall between 49 cents and 51 cents a share, a 4% to 9% gain on earnings in the year-ago quarter. Analysts surveyed by Thomson Reuters had expected earnings of 43 cents a share, down 10% from the year-earlier quarter.

The men's clothing retailer expects sales growth in the mid-single digits, compared to analysts' projections of 1% growth. The company's resilience makes it an outlier, as the greater retail industry is challenged by soft consumer discretionary spending.

"Our projected performance in the third quarter, which was somewhat affected by the government shutdown, marks a continuation of the positive trends we had seen at the end of the second quarter," said CEO R. Neal Black in a statement. "We are highly focused on continuing to improve our sales trend. We feel confident that the strategies we have in place will enable us to show continued improvement and to further strengthen our brand and best position it for the future."

The Hampstead, Maryland-based business will report third-quarter earnings on Nov. 25. The offer to buy Men's Wearhouse for $48 a share, or $2.3 billion, will expire on Nov. 14.

TheStreet Ratings team rates Jos. A. Bank Clothiers INC as a Buy with a ratings score of B. The team has this to say about their recommendation:

"We rate Jos. A. Bank Clothiers INC (JOSB) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share."

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

  • JOSB has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, JOSB has a quick ratio of 2.34, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for Jos. A. Bank Clothiers INC is rather high; currently it is at 62.16%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 6.12% trails the industry average.
  • The revenue fell significantly faster than the industry average of 20%. Since the same quarter one year prior, revenues fell by 10.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • In its most recent trading session, JOSB has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • Jos. A. Bank Clothiers INC's earnings per share declined by 38.5% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, Jos. A. Bank Clothiers INC reported lower earnings of $2.84 a share vs. $3.50 a share in the prior year. For the next year, the market is expecting a contraction of 8.4% in earnings ($2.60 a share vs. $2.84 a share).

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,071.22 -41.93 -0.24%
S&P 500 1,977.80 -5.05 -0.25%
NASDAQ 4,505.8520 -6.3420 -0.14%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs