May 23, 2012
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.
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