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Hartmarx (HMX) 4/28/2006
Current Price: $8.60 Outlook: Three-Month Target Price: $10.10 Hartmarx reaffirmed its financial guidance, of positive earnings. With the news and the exceptional state of fundamental and technical analysis indicators, Hartmarx is a terrific buy. Analyst Opinion of Hartmarx is pushing the stock price higher and higher, and Hartmarx has always reached analyst expectation. Hartmarx promotes modest and slow growth. It is a successful company and a strong long-term buy.
Profile:
Hartmarx designs, manufactures and distributes women and men’s apparel. HMX was established in 1872 in Chicago, Illinois. HMX sells it’s clothing through department and specialty stores. HMX has a corporate governance rating better than 91.4% of the Russell 3000 index and 87% higher than consumer and durable goods companies. Hartmarx operates in five different departments; luxury, tailored, sportswear, women and international. Each department uses its own strategy for obtaining growth and generating income for HMX. “For Hartmarx, 2005 was another year of substantial achievement. During this period, sales grew to $598.2 million, up from $586.4 million in 2004, while net earnings increased 48% from $15.9 million to $23.6 million. 2005 marked the fourth consecutive year of posting a substantial increase in earnings, which have grown from $.03 per diluted share in 2002 to $.25 in 2003, $.44 in 2004 and $.63 per share in 2005.” I believe we can expect growth along the lines of previous years for 2006.
Hartmarx Vs. Competitors:
Upon examining the chart above, it should be noticed the HMX is significantly smaller than its competitors (and still enjoying a similar Revenue and Earnings growth). HMX has a low P/S and P/E in comparing it to its competitors. However, HMX has a low Operating Margin compared to its competitors.
Fundamental Analysis Indicators:
a) Hartmarx has a higher Enterprise Value than Market Cap. Ihave always believed this is a good indicator of the value of the company. It shows the actual value of the company far exceeds the value given by investors. b) The Forward P/E is lower than the trailing P/E which predicts earnings growth in the near future. c) P/S and Enterprise Value/ Revenue are below 1. This is a sign of an undervalued company d) Price/Book is low when you compare it to the industry as a whole.
Debt to Equity is less than one, showing there is more equity than debt.
Analyst Opinion
Analysts predict positive earnings and revenue growth for the next quarter. Thomson First call rates HMX a 1.2 (on a scale of 1-5 where 1 is a strong buy and 5 is a strong sell). Analysts recommend this stock more than others.
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