NEW YORK (TheStreet) -- Men's Wearhouse (MW) has finalized a deal to purchase former rival Jos. A. Bank (JOSB) for $65 dollars a cash per share, or roughly $1.8 billion.
Jos. A. Bank had previously agreed to a deal acquire Eddie Bauer and must now pay a termination fee of $48 million.
Shares of Men's Wearhouse were up 4% to $56.83 in Tuesday afternoon trading, while Jos. A. Bank was up 3.8% to $64.20.
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TheStreet Ratings team rates MENS WEARHOUSE INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate MENS WEARHOUSE INC (MW) a BUY. This is driven by multiple 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 revenue growth, solid stock price performance, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures 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:
- The revenue growth came in higher than the industry average of 7.8%. Since the same quarter one year prior, revenues slightly increased by 2.8%. 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.
- Compared to its closing price of one year ago, MW's share price has jumped by 91.23%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, MW should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- MW's debt-to-equity ratio is very low at 0.10 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.
- Net operating cash flow has remained constant at $58.14 million with no significant change when compared to the same quarter last year. Along with maintaining stable cash flow from operations, the firm exceeded the industry average cash flow growth rate of -19.40%.
- 48.66% 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 5.88% trails the industry average.
- You can view the full analysis from the report here: MW Ratings Report