Shares of G-III Apparel (GIII, Financial) surged today, climbing 24.72%, after the company reported better-than-expected fiscal 2025 second-quarter earnings.
Revenue for the quarter ended July 31 fell 2% to $644.8 million, missing estimates of $649.4 million. Despite this, adjusted earnings per share (EPS) rose from $0.40 to $0.52, beating the consensus estimate of $0.27. Inventory levels were reduced by 24% to $610.5 million, and selling, general, and administrative (SG&A) expenses decreased by 4% to $229 million.
Performance was driven by strong results from owned brands DKNY and Karl Lagerfeld, both of which saw double-digit growth. Additionally, G-III (GIII, Financial) secured a new licensing agreement with Converse.
CEO Morris Goldfarb announced an increase in the company's earnings guidance for the year, citing an optimistic outlook for the fall and holiday seasons.
G-III (GIII, Financial) now forecasts a 3% increase in net sales to $3.2 billion and has raised its adjusted EPS forecast to a range of $3.95 to $4.05, compared to the previous range of $3.58 to $3.68 and the analyst consensus of $3.66.
From a valuation perspective, G-III Apparel Group Ltd (GIII, Financial) currently trades at a price of $31.23 with a price-earnings (PE) ratio of 8.18. The stock has a GF Value of 27.57, categorizing it as "Modestly Overvalued" according to GF Value. The GF Score is 81 out of 100, supported by strong metrics in financial strength and profitability.
G-III Apparel shows a notable Altman Z-Score of 3.38, indicating a strong balance sheet. The company's Piotroski F-Score is 8, highlighting its overall healthy situation. Moreover, the Beneish M-Score of -3.03 indicates that it is unlikely to be a manipulator.
Operating margins are expanding, which is generally a good indicator of the company's growing profitability. The stock also trades close to its 1-year low price-to-book (PB) ratio of 0.92, making it an attractive buy in terms of valuation.
The company's long-term performance metrics are equally compelling. Over the last 3 years, G-III has seen a revenue growth rate of 16.1%, outperforming the industry median. Its earnings growth rate is an impressive 74.8% over the same period. The free cash flow yield stands at a robust 28.27%, further signifying financial strength.
In conclusion, while the stock looks modestly overvalued, the company's strong financial position, coupled with improved earnings and optimistic guidance, make G-III Apparel (GIII, Financial) a noteworthy consideration for potential investors.
