For the last few years,
has been a pretty hot stock. The company has managed to beat out
many of its consumer discretionary peers and do quite well in the
In fact, DSW has surged more than 300% in the trailing five
year period, thoroughly crushing the S&P 500 in the process.
Much of these gains were the result of
consumers looking for bargains
at their stores, and with the economy slowly improving, there are
concerns about some trading up to the next level.
This is largely due to a bullish stock market, a return in
housing prices, and better job prospects. All of which makes
people feel richer and better about their future, a situation
that may not always be great news for discount companies like
These trends are finally starting to catch up to DSW in 2013,
as the company has seen its share price flounder, and investor
perception of the company change. The stock is actually down
about 4% YTD, and many are expecting this trend to continue in
the near term.
This shift in perception is largely due to the poor earnings
outlook for DSW in both the current quarter and current year
figures. In both of these time frames, there is universal
agreement among analysts to move estimates lower, with similar
projections hitting the next quarter and next year consensuses as
Furthermore, the magnitude of the decline has also been pretty
terrible, as the consensus has declined dramatically in just a
two month time frame. The current quarter figures have seen a
nearly 20% decline in the past two months, while the current year
numbers have fallen by nearly 10% in the same time frame.
It also doesn't help that in the company's latest earnings
report it missed expectations, marking the first time since 2010
that it failed to beat the consensus. Combine this miss, the huge
run up in DSW shares, and a broad pull away from consumer stocks
as of late, and you have a recipe for disaster in the short
Thanks to this, DSW currently has a Zacks Rank of 5 or 'Strong
Sell', meaning that it will likely underperform the broad market
in the short term. Furthermore, the stock has a Zacks
Recommendation of 'underperform' meaning that the longer term
picture isn't too favorable either.
DSW isn't looking like a great pick from an earnings
perspective, and it doesn't look like this trend will reverse any
time soon. So, it could be time to sell this stock, or at least
avoid the firm until its outlook improves.
Fortunately for investors looking to stay in the retail
segment of the consumer market though, there are a few more
favorably Ranked options out there. Any of these could
potentially be better plays than the struggling DSW for those who
are looking to stay in the broad consumer space.
In the Zacks Industry of
Retail-Apparel and Shoes
, we have found two stocks with Zacks Ranks of 2 or 'Buy'. Either
of these companies,
Joseph A. Bank (
, could make for interesting picks instead of the sluggish
Both of these stocks are seeing more positive trends in their
earnings estimate figures, and look to avoid at least some of the
woes that are impacting DSW. Furthermore, both recently saw a
move from a Zacks Rank of 3 or 'Hold' up to their current ranks
of buy, suggesting that now could be a good time to shop for
these stocks instead.
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