What happened

Shares of Tailored Brands'(TLRD) stock are looking sharp this morning, up 12% as of 10:50 a.m. EDT after the Men's Warehouse and Jos. A. Bank owner received an upgrade to "buy" from analysts at Jefferies & Co.

The investment banker also announced this morning it is assigning Tailored Brands a new price target of $40 per share, as reported on TheFly.com.

Man in suit with his arms folded smiling at the camera.

Tailored Brands stock is looking spiffy this morning. Image source: Getty Images.

So what

Tailored Brands management met with Jefferies analysts last month, and it appears the analyst's liked what they heard. In today's note, Jefferies argues that Tailored Brands is "on a path toward sustainable fundamental improvement and its legacy balance sheet issues are now behind it."

Jefferies believes the company as a whole has "opportunities" to profit from "custom clothing," and notes that the Jos. A. Bank business is recovering.

Now what

Tailored Brands stock certainly is recovering. Over the past 12 months, the stock has nearly tripled in share price, yet still trades only a bit above 18 times trailing earnings.

At first glance, that looks like a bargain, but there's good new and bad news to go along with it. The bad news is that Tailored Brands stock costs more than immediately meets the eye. The company's balance sheet shows $1.3 billion more debt than cash on hand, giving Tailored Brands an enterprise value of $2.9 billion, and thus a debt-adjusted valuation of about 30 times trailing earnings.

The good news is that Tailored Brands also spins off a lot more cash than you might expect -- $256 million over the past 12 months, versus reported "income" of just $97 million. That gives the stock an enterprise value-to-free-cash-flow ratio of just 11.3 despite its debt. That's not a bad price for a stock paying an above-market 2.3% dividend yield, and projected to grow its profits at 16.5% annually over the next five years.

My advice: Jefferies is right about this one. If you buy Tailored Brands, I think you're going to like the way your portfolio looks in a year or so.