Guess? Stock Looks Undervalued Ahead of Earnings

Year-to-date, GES is down more than 23%

facebook twitter linkedin


Guess?, Inc. (NYSE:GES) is surging ahead of its fourth-quarter earnings report, which is due out after tomorrow's close. Last seen up 3.9% at $18.05, the equity is now finding support at the $17 area, after breaching that level last week. The stock's 10-day moving average has been keeping a tight lid on gains since February, though, contributing to its 23.6% year-to-date deficit.

GES 10 Day

The security has a history of upbeat post-earnings reactions, finishing five of eight next-day sessions higher in the last two years, including an 11.4% pop in November. Options traders are pricing in a 17.6% swing for GES this time, which is significantly lower than the 23.5% move it averaged following its last eight reports, regardless of direction.

Short sellers have been piling on the equity of late. In fact, short interest rose 10.7% in the last two reporting periods, and the 8.30 million shares sold short now account for a massive 21.4% of the stock's available float, or more than one week's worth of pent-up buying power.

Meanwhile, at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), GES' baffling 10-day call/put volume ratio of 802.33 sits higher than all but 4% of readings from the past year. This indicates calls have been picked up at a much quicker-than-usual clip in the last two weeks. 

Guess stock currently trades at a price-earnings ratio of 6.90, and a price-sales ratio of 0.60, both of which indicate the security is undervalued. GES also provides a very high dividend yield of 5.18%, with a forward dividend of $0.90. In addition, the company has grown revenues by 30% and net income by more than $250 million since 2021, and is estimated to deliver a 10.5% increase in earnings, and 5.7% revenue growth for 2023.

In exchange for the high reward potential, Guess stock also comes with a high level of risk. GES' balance sheet is weak, with just $398 million in cash, and $1.2 billion in total debt. The company experienced substantial revenues and net income declines in 2021, when it reported $81.4 billion in net losses, and a 30% decrease in revenues.

Nonetheless, Guess stock's attractive valuation and high yielding-dividend puts GES’ upside potential among the highest for dividend stocks.

 

Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 

 

300x250 - Banner 3 - v1