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Men’s Wearhouse Inc (MW): Will Overhaul Of Jos. A. Bank Be Enough After Mixed Results?

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Men’s Wearhouse Inc (NYSE:MW) reported mixed second quarter results on Tuesday after the market close, beating earnings expectations but missing sales estimates. The company posted earnings per share of $0.98, up greatly from the $0.25 it reported for the same period of last year. Ignoring acquisition- and integration-related charges, the profit rises to $1.07 per share, just above Wall Street estimates of $1.05 per share. Net sales also registered a significant increase, to $920 million from $803 million reported a year ago. Nonetheless, sales missed estimates by quite a bit, as analysts covering the stock expected sales of $946.8 million. The market has taken the pessimistic side concerning the mixed results, as shares have slid by over 6.2% in pre-market trading this morning.

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The consensus for Men’s Wearhouse Inc (NYSE:MW)’s third quarter earnings is $1.07 per share, while revenues are expected to hover around the same level as the second quarter. The company has reaffirmed its fiscal year 2015 guidance, eyeing full-year earnings of $2.70 to $2.90 per share. So far this year, the stock is up by approximately 28%, having ended yesterday’s trading session at $56.52 per share. The company has many admirers among the hedge funds that we track, with Ken Griffin‘s Citadel Investment Group among them.

Why are we interested in the 13F filings of a select group of hedge funds? We use these filings to determine the top 15 small-cap stocks held by these elite funds based on 16 years of research that showed their top small-cap picks are much more profitable than both their large-cap stocks and the broader market as a whole; yet investors have been stuck (until now) investing in all of a hedge fund’s stocks: the good, the bad, and the ugly. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic the best ideas of the best fund managers on your own? These top small-cap stocks beat the S&P 500 Total Return Index by an average of nearly one percentage point per month in our backtests, which were conducted over the period of 1999 to 2012. Even better, since the beginning of forward testing at the end of August 2012, the strategy worked just as our research predicted and then some, outperforming the market every year and returning 118% over the last 36 months, which is more than 60 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).

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