Does The Jones Group Inc. (JNY) Look Interesting Now?

Brown Shoe Company, Inc. (NYSE:BWS) has a long operating history dated back to 1878, operating around 1,277 retail shoe stores in the U.S., Canada, China and Guam. Most of its revenue, around 62% of the total net sales, were generated from women’s footwear while men’s footwear ranked second, accounting for 24% of the total net sales.

Investors might like Brown Shoe because of its consistent dividend payment at $0.28 per share in the past five years. However, the dividend yield is not so high, at only 1.80% of its current price. Moreover, the payout ratio is quite high, at 85%. Thus, the dividend doesn’t seem to be sustainable if a headwind is coming to Brown Shoe. Lower earnings might make Brown Shoe to reduce its dividend payment and lower yield to shareholders.

For the full year 2013, Brown Shoe expects to generate around $2.54 to $2.57 billion in sales, with the diluted EPS coming in at around $0.63 to $0.70 per share. The adjusted EPS is estimated to be around $1.22 to $1.29 per share.

PVH Corp (NYSE:PVH) is a much larger company with a much higher valuation. PVH is trading at around $129.60 per share, with the total market cap of $10.50 billion. The market values PVH at as high as 14.65 times its trailing EBITDA.

PVH is one of the largest apparel companies, owning a lot of famous apparel brands including Van Heusen, Tommy Hilfiger and Calvin Klein. Recently, PVH has just made the strategic move by acquiring Warnaco. After the deal, PVH could have the total control of Calvin Klein’s two main categories: underwear and jeans. In the short-term, the acquisition might be a drag on the company’s profit. Nevertheless, Calvin Klein’s growth potential could benefit PVH Corp (NYSE:PVH) in the long run.

PVH offers shareholders quite a low dividend yield at only 0.10%. However, the company has quite a conservative dividend policy, with an extremely low payout ratio of 3%.

My Foolish take

As an individual investor, I am not excited about The Jones Group Inc. (NYSE:JNY) at its current market price due to high leverage level, a bit high valuation, and fluctuating profitability. Jones Group could receive a buyout offer that is much higher than its current trading price, but a higher premium should come with potential synergies and annual savings benefits for acquirers.

The article Does Jones Group Look Interesting Now? originally appeared on Fool.com and is written by Anh Hoang.

Anh HOANG has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Anh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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