Since March 2025, G-III has been in a holding pattern, posting a small loss of 1.8% while floating around $26.56. The stock also fell short of the S&P 500’s 15.9% gain during that period.
Is now the time to buy G-III, or should you be careful about including it in your portfolio? Get the full breakdown from our expert analysts, it’s free.
Why Do We Think G-III Will Underperform?
We don't have much confidence in G-III. Here are three reasons there are better opportunities than GIII and a stock we'd rather own.
1. Long-Term Revenue Growth Disappoints
A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, G-III grew its sales at a sluggish 3.9% compounded annual growth rate. This fell short of our benchmark for the consumer discretionary sector.
2. Revenue Projections Show Stormy Skies Ahead
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect G-III’s revenue to drop by 3.9%, a decrease from its 3.9% annualized growth for the past five years. This projection doesn't excite us and implies its products and services will face some demand challenges.
3. Previous Growth Initiatives Haven’t Impressed
Growth gives us insight into a company’s long-term potential, but how capital-efficient was that growth? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).
G-III historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 8.3%, somewhat low compared to the best consumer discretionary companies that consistently pump out 25%+.
Final Judgment
We cheer for all companies serving everyday consumers, but in the case of G-III, we’ll be cheering from the sidelines. With its shares trailing the market in recent months, the stock trades at 10.5× forward P/E (or $26.56 per share). This valuation multiple is fair, but we don’t have much confidence in the company. There are better investments elsewhere. Let us point you toward one of Charlie Munger’s all-time favorite businesses.
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