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Joe's Jeans Inc. Message Board

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  • ranni.malmsteen ranni.malmsteen Sep 14, 2011 3:26 PM Flag

    Is JOEZ every coming back?

    "yaya2945 said: your Price per Sales number is probably based on the trailing twelve months. How do you get forward looking analysis based on that?

    In my view, P/S x 0.4 could be bargain price for company like Joe’s IF we could see that going forward,

    1. Sales are growing (comparable basis)
    2. Their Profitability keeps improving
    3. Growth story which they could tell to tell investors. In fact they just recently told their story, I suspect Wall Street would not like to hear same story so soon again.

    I can’t see any of these points, in fact quite opposite. Trend indicates business is declining and moreover, I believe next year will be transition period and that’s not time to be owner of this company (falling knife). Based on these and few other points, JOEZ valuations look challenging (to put it mildly).

    “yaya2945 said: Tell me about the peg ratio, now that is forward looking, right?”

    Using peg, you will almost surely miss turning point. It might work situations where company is enough defensive (to generate positive earnings year after year) and growth period lasts many years. That’s not the case stocks like Joe’s / other stocks which I’m interested.

    If you use annual (historical) growth rate (like they do) PEG is not forward looking.
    Years ago I tried to use also peg metric part on my analysis and realized it lead me just pick up latest fads, stocks where growth story is running out of steam. It might work better, if you adjust those inputs heavily, what your crystal ball tells about future earnings & growth rate. That said, i think you get more accurate picture what is happening next, if you use other indicators than PEG ratio.

    Great questions, good luck to you!

0.1933-0.0117(-5.71%)Jan 28 4:00 PMEST