Why Shares of Men's Wearhouse Inc. Jumped Today

By Markets Fool.com

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

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What: Shares of apparel retailer Men's Wearhouse rose on Thursday after the company beat analyst estimates on all fronts when it reported its fourth-quarter earnings. Shares spiked as much as 12% in the morning, settling into an 8% gain by the early afternoon.

So what: Revenue for the quarter was $928.4 million, up 65.6% year over year as a result of the Jos. A. Bank acquisition, beating analyst expectations by about $9 million. Comparable sales rose across all of Men's Wearhouse's legacy brands, with Jos. A. Bank posting negative growth:

Brand

Comparable Sales Growth

Men's Wearhouse

6.8%

Moores

8.6%

K&G

6.8%

Jos. A. Bank

(6.6%)

Source: Men's Wearhouse

Men's Wearhouse reported a GAAP net loss of $0.75 per share and a non-GAAP net loss of $0.03 per share for the quarter. Analysts were expecting a non-GAAP net loss of $0.07 per share. Men's Wearhouse also increased its earnings guidance for fiscal 2017 to the range of $5.75 to $6.25 per share, reflecting stronger-than-expected performance from its K&G brand.

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Now what: Men's Wearhouse had a good quarter overall, and the integration of Jos. A. Bank into the company is still far from complete. The company is expecting rapid earnings growth in the coming years as it realizes further synergies from the deal, and if the company hits those targets, today's stock price will look like a pretty good deal in retrospect.

Men's Wearhouse is weighed down by quite a bit of debt from the Jos. A. Bank acquisition, though, and that will work against it as it attempts to lift earnings. At the end of 2014, the company had nearly $1.7 billion in debt, on which it paid $66 million in interest. Men's Wearhouse's strong earnings are a sign that things are going according to plan so far, and the market rewarded investors as a result. However, whether the full promise of the merger is ultimately realized won't be clear for a couple of years.

The article Why Shares of Men's Wearhouse Inc. Jumped Today originally appeared on Fool.com.

Timothy Green has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.