Skip to main content

Market Overview

An Analyst's First Impression Of DSW's Big Q2 Beat

Share:
An Analyst's First Impression Of DSW's Big Q2 Beat

Shares of DSW Inc. (NYSE: DSW) surged higher by 20 percent early Tuesday morning after impressing investors with a beat in its second quarter earnings report. DSW reported that it earned 38 cents per share in the quarter on revenue of $680 million while analysts were expecting the company to earn 29 cents per share on revenue of $66.1 million.

 

Despite top- and bottom-line beats, some analysts aren't sufficiently convinced DSW's stock deserves a Buy rating. The Buckingham Research Group's Scott Krasik maintains a Neutral rating DSW's stock with an unchanged $18 price target as there are better options available for investors in the shoe and footwear space.

Krasik's neutral stance stems from ongoing concerns, including:

    1. A "muting" of DSW's value proposition due to internet pricing.
    2. off-price retailers continue to offer a "more compelling" shopping experience.
    3. DSW's management has a reputation of poor capital allocation decisions that complicates DSW's operating margin potentials.

Instead of DSW, the analyst prefers Caleres Inc (NYSE: CAL)'s stock, which stands out as a more differentiated retailer with a strong branded business that accounts for 42 percent of total sales and 65 percent of its EBIT (se Krasik's track record here).

Bottom line, ongoing concerns pertaining to DSW's ability to drive positive comps on a sustained basis in the future justifies a Neutral stance and $18 price target for the time being. However, the analyst did note that the firm's price target and estimates will be under view following DSW's post earnings conference call.

Related Links:

Earnings Scheduled For August 22, 2017

10 Stocks To Watch For August 22, 2017

_______

Image Credit: By Ser Amantio di Nicolao (Own work) [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons

 

Related Articles (CAL + DSW)

View Comments and Join the Discussion!

Posted-In: Buckingham Research Group DSW retail earningsAnalyst Color Earnings News Reiteration Analyst Ratings Best of Benzinga

Latest Ratings

StockFirmActionPT
FIBKStephens & Co.Downgrades
LEAFCanaccord GenuityDowngrades8.5
AGMSidoti & Co.Downgrades115.0
KEXGabelli & Co.Downgrades
OCGNCantor FitzgeraldDowngrades11.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
SPAC
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com