Guess also reported Q4 earnings on the same day last week, and came in close to expectations with adjusted earnings of $0.95 per share compared to $1.05 per share for Q4 2011. Revenue was up 5% to $815 million. Although sales in Asia were higher for the Q4, sales in Europe and the US were flat to lower which pulled global revenue down 1%. The stock opened lower, and although it regained some lost ground midday, it ultimately closed last Wednesday off by more than 7%.
Most of the clothing sector ended the day lower, especially Abercrombie & Fitch Co. (NYSE:ANF) and American Eagle Outfitters (NYSE:AEO), but some of the weakness in the sector can also be attributed to the overall slump in the broader market. Guess is currently trading 2 times its book value and 12 times trailing earnings, and is a great value in comparison to its key peers. Abercrombie is trading 37 times earnings, while and American Eagle is valued at a 14.0x EPS multiple. While there is some trepidation among investors when it comes to the fickle teenage apparel market, Guess appears to be well positioned to absorb any temporary fluctuations in the whims inherent in the clothing industry.
Finally, there is homebuilder Lennar, which closed last Wednesday 2% lower after the prior day’s rally following a better than expected earnings report. Lennar reported 1Q net earnings of $57.5 million, or $0.26 per share, compared to $15.0 million, or $0.08 per share, for Q1 2011. Revenues were up 37% to $989.9 billion. The stock fell victim to profit-taking today after gaining nearly 6% following its earnings report, but the overall trend in the housing market should continue to push housing stocks higher. Lennar is currently trading at a paltry 2 times book value, about 9% below industry norms.
While many investors fear that losses like last Wednesday’s could put a damper on the recent rally in the Dow, there’s no question that the overall sentiment is that day’s losses are more about profit-taking that an actual shift in sentiment. While Oracle Corporation (NASDAQ:ORCL) clearly took the brunt of the selloff, the underlying fundamentals are still bullish. The housing market is improving, consumer spending is showing signs of life, and most stocks are priced consistent with their book values, and since this important day, the Dow is up nearly a full percentage point. We’ll keep an eye on the stocks mentioned above and you should too; each represents an interesting play, no matter how their latest earnings releases turned out.