Quick Take: Men's Wearhouse Dressed Down

We've said it many times: Mr. Market pays way too much attention to short-term blips, especially from retailers. That said, the pessimism on Men's Wearhouse (NYSE: MW  ) today looks mild by market standards.

The company's sin? It looked at current trends, then hemmed back earnings expectations to the low range of prior guidance, which pins them somewhere around $0.63 or $0.64 per share. That's hardly the stuff of nightmares, even in a sector where small shortcomings can knock 6% off sales, as at peer Jos. A. Bank (Nasdaq: JOSB  ) .

I have to yawn at today's news, too, but that doesn't mean I like the stock. When I run a cash flow valuation on Men's Wearhouse, I find the stock 50% overvalued. If it's not, its future growth will have to accelerate beyond anything it's put up in recent years to justify the current price. I just don't see that happening, and I think acquisitions and reliance on a tux-rental story provide a tacit admission that management doesn't see the future through the same rosy tint as Mr. Market's specs.

This is a decent business. Margins have expanded nicely, and cash flow is solid. But that's only worth so much. I wouldn't buy Men's Wearhouse unless it were hemmed back to about $35 a share.

Comments? Bring them here.

At the time of publication, Seth Jayson had no positions in any company mentioned here. See his latest blog commentary here. View his stock holdings and Fool profile here. Fool rules are here.