Shoes were hot during the Great Recession as it was a low cost
way for consumers to update their wardrobes.
Brown Shoe Company
(
BWS
) grew revenue in the first quarter as warmer weather helped boost
sales. This Zacks #2 Rank (Buy) is a value stock, with a
price-to-sales ratio of just 0.2.
Brown Shoe Company operates 1,300 Famous Footwear and Naturalizer
stores in the U.S., Canada and China. It also designs and markets
other brands such as Dr. Scholl's, Franco Sarto, Via Spiga, Vera
Want and Ryka across many distribution channels.
The company also operates several web sites including
FamousFootwear.com, Naturalizer.com and Shoes.com.
Brown Shoe Beat By 156% In Fiscal Q1
On May 18, Brown Shoe reported its fiscal first quarter results and
blew by the Zacks Consensus by 14 cents. Earnings were 23 cents
compared to a Zacks Consensus of just 9 cents. It was the first
earnings beat in the last 4 quarters.
Sales rose 1.1% to $626.4 million from $619.6 million in the year
ago quarter. The Famous Footwear segment saw sales rise 1.3% with
same store sales up 2.5%. Better-than-expected weather drove growth
in running and sandals.
Wholesale Operations also saw sales gains of 2.8% as its
Contemporary Fashion brands, especially Franco Sarto and Sam
Edelman, rose 20.8%. In the Healthy Living category, Dr. Scholl's
Shoes and Ryka saw improved performance.
Specialty Retail, the smallest segment, saw a 6.1% sales decline.
Additionally, gross profit margin fell to 38.2% compared to 40% in
the year ago quarter.
Raised Full Year Guidance
With a better-than-expected first quarter, Brown Shoe raised its
full year EPS guidance to a range of 83 cents to 95 cents from its
prior range of 78 cents to 92 cents.
The company remains "cautious" about the state of the economy,
however.
The 2012 Zacks Consensus Estimate Rises
4 out of 5 estimates have been revised higher for 2012 pushing the
Zacks Consensus up 2 cents to 88 cents.
This is earnings growth of 25% as the company made just 70 cents
last year.
Still Has Value
Shares spiked after the first earnings beat in a year.
But they're still well off their 2011 highs.
The company has a lot of value characteristics.
In addition to a P/S ratio well under 1.0, which is one indicator
for finding undervalued companies, Brown Shoe has a price-to-book
ratio of 1.2. A P/B ratio under 3.0 usually means there is value.
Brown Shoe also has a P/E of 13.6, which is under the cut-off of
15x I use for value stocks.
Shareholders don't just get value, they also get a dividend
currently yielding a healthy 2.4%.
Shoes had staying power during the Great Recession. Brown Shoe
offers a way into the sector for investors looking for value.
This Week's Value Zacks Rank Buy Stocks
Is it too scary to buy a refiner right now?
Western Refining Inc.
(
WNR
) is trading with a forward P/E of just 4.9 as investors have fled
the refining and energy stocks. Yet this Zacks #1 Rank (Strong Buy)
is still expected to see double digit earnings growth in 2012.
Read the full article.
Global infrastructure plays are managing to hold strong despite the
European slowdown.
Valmont Industries, Inc.
(
VMI
) is still expected to post high double digit earnings growth as it
saw record sales of irrigation equipment and utility structures in
Q1. Yet this Zacks #1 Rank (Strong Buy) is also a value stock with
a forward P/E of 13.4.
Read the full article.
Amidst all the IPO hype, don't ignore the tried and true.
Lincoln Electric Holdings, Inc.
(
LECO
), founded all the way back in 1895, is expected to post double
digit earnings growth for the third year in a row in 2012. This
Zacks #1 Rank (Strong Buy) doesn't just have growth, though, it
also has value, with a forward P/E of just 13.7.
Read the full article.
Destination Maternity Corporation
(
DEST
) has been making news lately. It recently opened its first Indian
freestanding store and announced a partnership with entertainer
Jessica Simpson on a new maternity line. This Zacks #1 Rank (Strong
Buy) is still a value stock with a forward P/E of 12.6.
Read the full article.
Tracey Ryniec is the Value Stock Strategist for
Zacks.com
. She is also the Editor of the Turnaround Trader and Insider
Trader services. You can follow her on twitter at
@TraceyRyniec
.
BROWN SHOE CO (BWS): Free Stock Analysis Report
BROWN SHOE CO (BWS): Free Stock Analysis Report
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