Jos. A. Bank Gets No Respect From Wall Street

I was reminded this week why the only research I pay for is Valueline.

I was reminded this week why the only research I pay for is Valueline.

The stock which supplied this refreshing reminder is Jos. A. Bank (JOSB). Jos. A Bank is a chain of mens suit and formal wear stores, numbering just under 400 at present. Last June, JOSB "shocked" the street when they missed earnings for only the 2nd quarter in the previous 17. Inventory was up more than sales, worrying analysts. Management insisted it was just a bump in the road. Wall Street disagreed. Two analysts downgraded the stock that day.

JOSB has grown sales rapidly since a tough, recession-induced environment for dresswear in 2001 and operating margins have expanded to record levels year after year. With the share price in the mid-20s last summer, the stock was selling for 11 times analysts' reduced estimates.

Fast forward to two days ago. JOSB reported solid 2006 results, inventory was back to normal, and JOSB has $40 mil in cash net of debt. Shares jumped back to where they were prior to the June 2006 announcement. Full year earnings came to $2.36. Analyst estimates prior to JOSB's June 2006 earnings announcement, by the way, had been $2.35 for 2006.

Full Disclosure: We still own shares of JOSB.

JOSB 1-yr chart: