NEW YORK (TheStreet) -- Men's Wearhouse (MW - Get Report) shares are up 1.2% to $55.87 on Wednesday after being upgraded to "outperform" from "neutral" earlier today by analysts at Cowen & Co (COWN - Get Report).
The firm cited low cost synergy estimates and free cash flow related to the company's acquisition of Jos. A Bank as the reason for the improved outlook.
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TheStreet Ratings team rates MENS WEARHOUSE INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate MENS 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 revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and expanding profit margins. 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:
- MW's revenue growth has slightly outpaced the industry average of 2.1%. Since the same quarter one year prior, revenues slightly increased by 2.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- MW's debt-to-equity ratio is very low at 0.09 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.41 is very weak and demonstrates a lack of ability to pay short-term obligations.
- Compared to its closing price of one year ago, MW's share price has jumped by 50.29%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- 48.42% is the gross profit margin for MENS WEARHOUSE INC which we consider to be strong. Regardless of MW's high 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 2.61% trails the industry average.
- MENS WEARHOUSE INC's earnings per share declined by 47.7% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, MENS WEARHOUSE INC reported lower earnings of $1.65 versus $2.55 in the prior year. This year, the market expects an improvement in earnings ($2.66 versus $1.65).
- You can view the full analysis from the report here: MW Ratings Report