Its shares falling by -3.43% today, G-III Apparel seems to be confirming what most analysts are saying about the stock. Despite its average rating of hold, might the stock be attractive to long term value investors? Let's unpack some of the company's fundamentals to find out.
Over the last year, G-III Apparel shares have moved -50% while trading between the prices of $11.6 and $30.45.
At its current price of $14.48 per share, GIII has a trailing price to earnings (P/E) ratio of 4.09 based on its 12 month trailing earnings per share of $3.54. Considering its future earnings estimates of $2.85 per share, the stock's forward P/E ratio is 5.08. In comparison, the average P/E ratio of the Consumer Discretionary sector is 22.33 and the average P/E ratio of the S&P 500 is 15.97.
G-III Apparel's P/E ratio tells us how much investors are willing to pay for each dollar of the company's earnings. The problem with this metric is that it doesn't take into account the expected growth in earnings of the stock. We can solve this problem by dividing the trailing P/E ratio by the company's five year earnings growth estimate, which in this case gives us a 0.98 Price to Earnings Growth (PEG) ratio.
A PEG ratio between 0 and 1 indicates a potentially undervalued stock. This metric is useful because some companies have a low P/E ratio for a reason: there is no earnings growth potential in the stock. Other companies may have high P/E ratios, but may still be undervalued if they have very high expected earnings growth rates. The main caveat with the PEG ratio is that it relies on the company's earnings growth estimates, which are potentially subject to manipulation.
We can also compare the ratio of G-III Apparel's price to its book value. A company's book value refers to its present liquidation value: what would be left if the company sold off all its assets and paid off all of its debts today. GIII has a book value of 0.392, with anything close or below one indicating a potentially undervalued company.
Next up in our analysis is G-III Apparel's free cash flow, which stands at $167,537,000. This represents the cash that is available to the company after all of its expenses and income are accounted for -- including those that arise outside of its core business activities. This money can be used to re-invest in the business or to payout a dividend. For now, at least, G-III Apparel has chosen the former.
