Men's Wearhouse (MW) Marked As A Barbarian At The Gate
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.
Trade-Ideas LLC identified
(
) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Men's Wearhouse as such a stock due to the following factors:
- MW has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $42.2 million.
- MW has traded 185,724 shares today.
- MW traded in a range 229.5% of the normal price range with a price range of $2.49.
- MW traded above its daily resistance level (quality: 182 days, meaning that the stock is crossing a resistance level set by the last 182 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).
Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.
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More details on MW:
The Men's Wearhouse, Inc., together with its subsidiaries, operates as a specialty apparel retailer in the United States and Canada. The company operates through two segments, Retail and Corporate Apparel. The stock currently has a dividend yield of 1.4%. MW has a PE ratio of 330.7. Currently there are 5 analysts that rate Men's Wearhouse a buy, no analysts rate it a sell, and none rate it a hold.
The average volume for Men's Wearhouse has been 721,800 shares per day over the past 30 days. Men's Wearhouse has a market cap of $2.4 billion and is part of the services sector and retail industry. The stock has a beta of 1.41 and a short float of 11.6% with 6.15 days to cover. Shares are up 8.4% year-to-date as of the close of trading on Tuesday.
Analysis:
rates Men's Wearhouse as a
. The company's strengths can be seen in multiple areas, such as its revenue growth and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 14.2%. Since the same quarter one year prior, revenues rose by 37.3%. 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.
- 44.92% 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 0.76% trails the industry average.
- MENS WEARHOUSE INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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 ($2.55 versus $1.65).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Specialty Retail industry. The net income has significantly decreased by 82.2% when compared to the same quarter one year ago, falling from $38.20 million to $6.79 million.
- Currently the debt-to-equity ratio of 1.63 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with this, the company manages to maintain a quick ratio of 0.31, which clearly demonstrates the inability to cover short-term cash needs.
- You can view the full Men's Wearhouse Ratings Report.
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