Guess? (GES) Net Profit Margin Falls to 2.5%, Undermining Bullish Profitability Narratives

Guess? (GES) just released its Q3 2026 financials, reporting total revenue of $791 million and basic EPS of $0.50. Looking back, the company has seen revenue range from $647 million to $932 million per quarter across the last five quarters, with EPS shifting from -$0.65 to $1.59 over the same period. Margins have fluctuated, and these latest results put the focus squarely on how profitability compares with ongoing market expectations.

See our full analysis for Guess?.

Next up, we're taking these headline numbers and comparing them with the current narratives on Simply Wall St. Some commonly held assumptions could be confirmed, while others might face a shakeup.

Curious how numbers become stories that shape markets? Explore Community Narratives

Five-Year Profitability Stands Out

• Guess? achieved a 5% per year average earnings growth over the last five years, showing a sustained move to profitability despite recent negative trailing twelve-month results.
• General investor opinion points to this long-term profitability as a core positive, especially when shorter-term figures like trailing twelve-month growth (negative) do not match the multi-year trend.
  • The current net profit margin is 2.5%, lower than last year's 3.2%, providing a counterpoint against celebrating past improvements too quickly.
  • This reflects the prevailing market view that while the five-year story is positive, current growth rates are now lagging behind the US market's 10.5% average.

Valuation Multiples Under Industry Average

• The Price-to-Earnings ratio is currently 11.2x, which is below the US Specialty Retail average of 18.9x and the peer group average of 30.8x.
• Market commentary often highlights this relative valuation discount as appealing, but the market view also warns the share price ($17.06) is trading above the DCF fair value estimate of $11.75.
  • Critics highlight that while low P/E can signal value, Guess?'s muted revenue growth outlook of 3.5% per year does not align with higher-growth industry peers.
  • This situation keeps some investors wary, weighing the "cheap" multiple against underlying growth dynamics and fair value estimates in context.

Margin Compression Offsets Revenue Progress

• Net profit margin dropped to 2.5% this year from 3.2% last year, despite revenue holding above $3.1 billion on a trailing basis.
• Prevailing analysis draws a line between stable top-line sales and eroding profits, suggesting that cost pressure or operating challenges are preventing revenue gains from flowing through to bottom-line growth.
  • This finding challenges the narrative that scale alone will secure margin strength for Guess? and raises questions about future earnings health if margins cannot be defended.
  • Consensus is forming that investors will be closely watching cost management and sustainability of profitability, even if modest sales growth continues.

Next Steps

Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on Guess?'s growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.

See What Else Is Out There

Despite Guess?'s improving long-term profitability, current revenue growth is lagging the industry and margin pressure continues to limit near-term upside.

If you’re seeking steadier performance and more consistent earnings expansion, check out stable growth stocks screener (2073 results) that align with those goals.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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