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Does DSW Still Exist in Your Portfolio? - Analyst Blog

6/19/2014 6:35:00 PM
Referenced Stocks:FL;DSW;CTRN;MW

It seems that investors are losing confidence in DSW Inc. ( DSW ), after this branded footwear retailer posted a dismal first-quarter fiscal 2014 performance. Shares of this Zacks Rank #5 (Strong Sell) company have dropped roughly 13% since the earnings announcement on May 28, whereas year to date, the stock has fallen about 34%.

Estimates for DSW have been portraying a downtrend since the company delivered first-quarter results. It seems that analysts have become less constructive on the stock's future performance. This is evidenced by the Zacks Consensus Estimate that tumbled 20.1% to $1.51 for fiscal 2014 and 14.7% to $1.85 per share for fiscal 2015 in the past 30 days.

Keeping the stock in your portfolio any longer does not seem to be a good idea, unless you are willing to wait for it to pick up steam. A look at the company's performance in the last concluded quarter should remove any further doubts.  

The quarterly earnings of 42 cents a share fell short of the Zacks Consensus Estimate of 48 cents and slumped 16% from the year-ago period.

Owing to an intense promotional retail environment and an erratic weather, the top line slipped 0.4% to 598.9 million, with comparable-store sales (comps) declining 3.7% year over year. Sales also lagged the Zacks Consensus Estimate of $636.0 million.

This branded footwear retailer envisions earnings for fiscal 2014 to lie in the band of $1.45-$1.60 per share. Additionally, the company anticipates comps to decline by a low single-digit rate while expecting adjusted sales to improve at the same rate.

Other Stocks Worth Considering

Other better-ranked retail stocks that look promising and are expected to continue with their upbeat performance include Citi Trends, Inc. ( CTRN ) sporting a Zacks Rank #1 (Strong Buy), and Foot Locker, Inc. ( FL ) and The Men's Wearhouse, Inc. ( MW ), both carrying a Zacks Rank #2 (Buy).

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