NEW YORK (TheStreet) -- Jos. A. Bank Clothiers (JOSB) hit an all-time high of $64.63 as of 2:47 p.m. on Tuesday after the announcement that rival Men's Wearhouse (MW) had reached an agreement to purchase Jos. A. Bank for approximately $1.8 billion.
The two sides had been bidding to acquire each other since October, when Jos. A. Bank made an offer of approximately $2.3 billion to buy Men's Wearhouse. The final offer price announced is $65 a share. Men's Wearhouse, which had previously offered $63.50 a share, said the deal would create the fourth-largest U.S. men's apparel retailer with annual sales of approximately $3.5 billion. The deal would keep the Jos. A. Bank name in place.
Jos. A. Bank must terminate its deal to buy Eddie Bauer as part of the deal with Men's Wearhouse.
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TheStreet Ratings team rates JOS A BANK CLOTHIERS INC as a "buy" with a ratings score of B. TheStreet Ratings 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 revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
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 6.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- 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 2.39, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has significantly increased by 365.83% to $16.85 million when compared to the same quarter last year. In addition, JOS A BANK CLOTHIERS INC has also vastly surpassed the industry average cash flow growth rate of -19.40%.
- The gross profit margin for JOS A BANK CLOTHIERS INC is rather high; currently it is at 60.44%. 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 5.50% trails the industry average.
- The net income growth from the same quarter one year ago has exceeded that of the Specialty Retail industry average, but is less than that of the S&P 500. The net income increased by 2.3% when compared to the same quarter one year prior, going from $13.31 million to $13.62 million.
- You can view the full analysis from the report here: JOSB Ratings Report