Is Jones Group a Good Value Pick?

Tickers in this article: JNY

The market, however, was unimpressed by those results, primarily because Jones lowered guidance for the full year and suggested that the holiday retail season may be challenging.

The balance sheet has pluses and minuses. Jones ended last quarter with a healthy $234 million, or $3.14 per share, in cash. Inventory dropped about 6% vs. the same quarter last year. Debt, however, stood at $960 million, putting the long-term debt-to-equity ratio at 87.4%, which is a concern, for me anyway. Interest expense for the quarter was $37.8 million and for the trailing nine months was $89.7 million.

Jones is maintaining its 5-cent quarterly dividend and yields 1.8%. The company is also buying back stock and has reduced shares outstanding by 4.2 million shares in the past year. I like the dividend and the buyback activity; that can be a powerful combination. I don't, however, like the level of debt.

Consensus estimates for 2013 are calling for earnings of $1.23, putting the forward price-to-earnings ratio at 9. At this point, Jones is back on my radar, but I'll be looking for further progress.

At the time of publication, Heller had no positions in stocks mentioned .