) is positioned to perform well when it reports again late next
month. This footwear and accessories retailer has beaten earnings
estimates in nine of the past ten quarters, including a strong
second quarter performance from late August. In addition to all
this, Genesco is a true value pick with a price-to-book (P/B) ratio
of 2.03, a price-to-sales (P/S) ratio of 0.60 and a price-to
earnings ratio of 12.15.
Solid Second Quarter
Genesco reported fiscal second quarter results on August 29,
including earnings per share of 50 cents that blew past the Zacks
Consensus Estimate of 27 cents by 85.2%. Earnings also jumped
127.3% from last year thanks to solid sales growth and a
significant operating expense leverage.
Net sales climbed 15% year over year to $543.5 million and
surpassed the Zacks Consensus Estimate of $534 million, benefiting
from the inclusion of sales from Schuh Group and a 4% rise in
comparable store sales (comps). Genesco acquired Scotland-based
Schuh Group, a specialty retailer of casual and athletic footwear,
in June 2011.
All operating divisions, including The Lids Sports Group, the
Journeys Group, Schuh group, and Johnston & Murphy Retail, saw
positive comps in the quarter.
Gross margin expanded 10 basis points to 50.5%. Adjusted operating
income more than doubled to $20.3 million from $9.8 million last
year, driven by operating expense leverage.
The third quarter is off to a good start with August comps up 9%,
much improved from the second quarter's 4%. Genesco is scheduled to
report its fiscal third-quarter results on November 22. Presently,
the Zacks Consensus Estimate is calling for $1.33 per share.
Bolstered by the company's second quarter performance, management
raised its guidance for fiscal 2013. It now expects earnings per
share between $4.88 and $5.00 from the previous range of $4.70 to
$4.82. The raised guidance reflects a 19% to 22% increase from
earnings of $4.09 in fiscal 2012. Comps are expected to grow 4%.
Sales should increase about 13% to 14%, including benefits from the
Schuh acquisition. Excluding Schuh, sales are forecasted to
increase 7% to 8%.
Earnings Momentum Advancing
Over the last 60 days, the Zacks Consensus Estimate for fiscal 2013
has gone up by 4.2% to $5.02, reflecting a year-over-year growth
rate of 22.7%. The Zacks Consensus Estimate for fiscal 2014 has
gone up by 3.5% to $5.64 over the same timeframe, reflecting
year-over-year growth of 12.3%.
The company has a price-to-book (P/B) ratio of 2.06, a
price-to-sales (P/S) ratio of 0.6, and a price-to-earnings ration
of 12.15, well under the parameters for a value stock. The PEG
ratio comes in at 0.66, a 34% discount to the benchmark of 1 for a
fairly-priced stock. Going forward, there is an untapped potential
locked in the stock.
Genesco sells footwear, headwear, sports apparel and accessories in
the U.S., Canada, the United Kingdom and the Republic of Ireland.
Its principal brands are Journeys, Journeys Kidz, Shi by Journeys,
Underground by Journeys, Schuh, Lids, Lids Locker Room and Johnston
& Murphy. Genesco has a market cap of roughly $1.45 million.
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