Men's Wearhouse Inc. (MW): Zacks Rank Buy

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Men's Wearhouse Inc. (MW) has been defying the gloom and doom retail predictions since the Great Recession. The men's retailer is expected to post its third year of double digit earnings growth in fiscal 2012. This Zacks #1 Rank (Strong Buy) is also a value stock with a forward P/E of 12.8.

Men's Wearhouse is a men's apparel specialty retailer which operates 1,239 stores under three brands: Men's Wearhouse, Moores and K&G.

The company carries brand name and private label suits, sport coats, and accessories. Tuxedo rentals are also available at the Tux stores and some of its other stores.

Men's Wearhouse also operates a global corporate apparel and workwear segment which includes TwinHill in the United States and Dimensions and Alexandra in the United Kingdom.

Men's Wearhouse Beat Again in the 2011 Fiscal Fourth Quarter

On Mar 7, Men's Wearhouse reported its fiscal fourth quarter results and easily beat the estimate by 7 cents. Earnings per share were a loss of 5 cents compared to the consensus of a loss of 12 cents. That's a beat of 58.3%.

The company has a strong earnings surprise track record, having beaten 11 quarters in a row.

Sales rose 3.7% in the fourth quarter to $562.2 from $542.1 million. Retail sales jumped 6%, led by sales in Men's Wearhouse which gained 9.8%. Corporate apparel lagged, as sales fell 14.3%.

The increase was mainly due to increases in average unit selling prices in the U.S.

Tuxedo rentals also continued to be hot with U.S. comparable store sales up 14.9% due primarily to an increase in the number of tuxes rented.

Same store sales for Men's Wearhouse surged 9.3% compare to just 4.3% in the fourth quarter of the prior year.

Fiscal 2012 Guidance

Men's Wearhouse was bullish in March.

The company expected an EPS increase of 13% to 17% in fiscal 2012 which would be EPS in the range of $2.70 to $2.78.

Zacks Consensus Estimates Jump

The analysts are even more optimistic. The fiscal 2012 Zacks Consensus Estimate has jumped to $2.82 from $2.64 in the last 60 days.

That is earnings growth of 19.1% as the company made just $2.37 in fiscal 2011.

It is also well above the high end of the company's guidance range.

Men's Wearhouse is expected to report fiscal first quarter results on June 6.

Plenty of Value

Despite a hot share price that recently hit new 2-year highs, Men's Wearhouse has a lot of value.

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Its forward P/E of 12.8 is well under its peers who average 15.4.

The company also has a price-to-book ratio of 1.8. A P/B ratio under 3.0 usually indicates value.

To top it off, Men's Wearhouse also has a price-to-sales ratio of just 0.8. A P/S ratio under 1.0 can mean a company is undervalued.

Men's Wearhouse is sharing its recent successes with shareholders. It raised the quarterly dividend by 50% in January 2012. The dividend is now yielding 2%.

Men's Wearhouse is a value retailer with a strong growth profile. That's a rare combination.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at @TraceyRyniec.

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