Buy: Shoe Carnival (SCVL)
from Upside
On paper, Shoe Carnival (SCVL) looks a lot like a traditional footwear retailer. But its stores feature an announcer that organizes contests and games and promotes limited-time offers. Through 402 locations in 34 states and Puerto Rico, the retailer offers value-priced shoes emphasizing name brands.
On average, each store generates roughly $2.4 million in annual sales and carries about 28,000 pairs of shoes. Shoe Carnival has opened 88 locations since the end of 2010, increasing its store base by 28%. In large markets, multiple stores are typically opened simultaneously to generate cost efficiencies and leverage advertising and distribution.
For fiscal 2016 ending January, consensus estimates project per-share earnings will increase 17% to $1.48. Revenue should climb nearly 5%. Over the next five years, per-share earnings are expected to increase at a 15% annualized rate.
Shoe Carnival faces potentially aggressive pricing and promotional activity from competitors. Still, the company seems capable of delivering solid profit growth, paced by a higher store count and expanding market share.
Shoe Carnival earns an Overall Quadrix score of 93, with solid marks for Momentum (89), Value (70), and Earnings Estimates (82). The stock is being initiated as a Buy.
Richard J. Moroney, CFA, Upside, www.upsidestocks.com, 800-233-5922, August 2015