Intangible Valuation
Value, contrarian, coat tail rider, idiosyncratic research

Perry Ellis: A Branded Apparel Stock On Sale

Perry Ellis International Inc. (NASDAQ:PERY) is a diversified apparel brand manager and distributor. The company's earnings have recently been depressed due to a decline in gross margins, an increase in SG&A expenses and some portfolio pruning. Given that the weakness in gross margins is likely temporary, we believe the recent decline in earnings offer an opportunity to pick up the shares.

We estimate long-term earnings power to be between $25 million and $30 million, putting the earnings yield at about 11.2% to 13.5% (a P/E of 8.9 to 7.4). Given the asset light nature of the business and the value of the company's brands, the company is also qualitatively attractive. Further, with the common stock selling at a

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