Men’s Wearhouse, Inc. (MW) is up more than 200% in the last 6 months as the company uses promotional activities and special discounts to drive sales.

Company Description

The Men’s Wearhouse, Inc. operates as a specialty retailer of men’s suits in the United States and Canada. The company was founded in 1974 and has a market cap of $1.31 billion.

Men’s Wearhouse has found a niche in the weakened consumer environment by offering deep discounts and special promotions to lure customers into its stores. These factors, coupled with cost cutting and margin growth, helped the company produce better than expected second-quarter results, reported on Sep 9.

Second-Quarter Results

Sales were down a bit from last year, off 3.5% to $526 million. Earnings came in strong at 75 cents per share, 16 cents better than the Zacks Consensus Estimate.

The company has beat in each of the last 4 quarters by an average 11 cents, or 44%.

Mens Wearhouse also noted that it boosted its cash and short-term investments position by $44.7 million to $163.9 million.

Guidance and Estimates

The company did however cause some disappointment when it delivered softer than expected third-quarter guidance between 27 and 30 cents per share against 32 cents.

But in spite of the lower than expected guidance, the long-term picture is still strong, with analysts projecting 17% earnings growth in the next-year period.

Valuation

Based on the current-year estimate of $1.01, shares trade with a P/E of 25X, a premium to the overall market.

The Chart

Shares of MW have been rallying with the market since early March after bottoming out just above $9. Shares have since topped off above $27 before the recent pullback on the lower than expected guidance. Take a look at the nice long-term trend higher in the chart below.

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