Guess? Expected To Deliver Worst Quarter In Years; Hedge Funds Still Betting On The Stock

Shares of Guess?, Inc. GES are down on Monday, ahead of the announcement of the company’s first quarter (fiscal 2016) financial results, scheduled for after the market closes on Tuesday. According to Estimize, expectations point towards the weakest earnings in years.

As it can be seen in the chart above, the company’s earnings respond to a cycle, peaking in the fourth quarter and hitting their bottom in the first quarter. In the first quarter last year, Guess? reported a net loss of ($0.03) on revenue of $522.5 million. In the last quarter, earnings came in at $0.63 per share, and revenue, at $696.73 million.

Below is a table featuring the company’s history of estimates and earnings for the past couple of years.

For the current quarter, the company guided a net loss of ($0.05) on revenue of $530.38 million. The Street is modeling a loss in line with guidance, but on lower revenue ($488.97 million). The crowd is slightly less bearish, and projects a consensus net loss of ($0.04) on revenue of $490.64 million.

Now, it should be noted in the graph overhead that Guess? has a history of surpassing estimates. So, a beat this quarter should not be cast-off.

Institutional Support

Wall Street research firms are not particularly interested in Guess? Only two of them have weighed in on the stock this year: Piper Jaffray downgraded it to Underperform on February, and Jefferies reiterated a Hold in March.

However, hedge funds and other institutional investors seem to be into the stock. According to recent SEC filings, over the first quarter of 2015, Joel Greenblatt’s Gotham Asset Management more than doubled its exposure, to 2,680,779 shares worth almost $50 million; Jim Simons’ Renaissance Technologies sextupled its wage to 1,022,900 shares; and Ken Griffin’s Citadel Advisors tripled its bet, disclosing ownership of 566,509 shares as of March 31.