Men's Wearhouse Shares Popped: What You Need to Know (MW)

Men's Wearhouse Shares Popped: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of apparel retailer Men's Wearhouse (NYSE: MW ) rallied 13% Wednesday after its quarterly results and guidance topped Wall Street expectations.

So what: The shares have slumped over the past several months on worries about the weak economy, but the convincing third-quarter earnings beat -- EPS of $0.77 versus the consensus of $0.65 -- suggests that things aren't as bad as Wall Street had thought. The company's gross margins even increased 315 basis points, to 14.1%, giving investors plenty of good feelings about the profit trend, as well.

Now what: Looking ahead, management now sees full-year adjusted EPS of $2.28 to $2.31, while analysts were expecting EPS of just $2.19. "If I am correct, then we are once again entering a golden age for purveyors of tailored clothing," Chairman George Zimmer said on a conference call. "I have patiently waited for this time to arrive and I'm grateful that the youngest generation [to come] of age understands that dressing up feels good and looks good." With the stock still trading at a clear price-to-cash flow discount to main rival Jos. A Bank Clothiers (Nasdaq: JOSB ) , Men's Wearhouse seems like the sharpest way to play that trend.

Interested in more info on Men's Wearhouse? Add it to your watchlist.

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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.

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