Why Shares of Guess? Jumped

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 retailer Guess? (NYSE: GES  ) jumped 10% in early trading today after the company released first-quarter earnings.

So what: Revenue was better than expected, coming in at $579.3 million, versus the $569.8 million expectation. Earnings outperformed estimates as well, reaching $0.30 per share, but the good times may not last, as the company's second-quarter estimate fell well below expectations.

Now what: The first quarter may have turned out better than expected, but revenue was down 2%, and earnings fell from $0.46 per share a year ago to $0.30 this quarter. The company's performance isn't going in the right direction, and sliding sales are especially bad in the retail business. Shares trade at just nine times trailing earnings, but I'm worried enough about falling earnings to see a value trap, rather than real value.

Interested in more info on Guess? Add it to your watchlist by clicking here.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

The Motley Fool owns shares of Guess?. Motley Fool newsletter services have recommended creating a stock repair position in Guess?. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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