Brown Shoe Company - Value

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.
 
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