Shoe Carnival Q3 Results Outperform; Shares Hit All Time High

One of the largest American family footwear retailers, Shoe Carnival, Inc. (SCVL) reported outstanding third-quarter results, with both earnings and sales beating estimates by a huge margin.

SCVL witnessed solid demand for its products after COVID-19 restrictions were relaxed and the economy rebounded. The company also increased its full-year fiscal 2021 outlook.

Following the news, shares hit a new all-time high of $45.30 before closing the day at $43.72 on November 17.

Outstanding Results

The company reported earnings of $1.64 per share, a whopping 221.5% growth year-over-year, significantly outpacing analysts’ estimates of $1.15 per share.

Furthermore, quarterly net sales rose 29.8% year-over-year to $356.34 million driven by an overall increase in demand for the company’s products, meaningfully outpacing Street estimates of $314.7 million.

Management Comments

Mark Worden, President, and CEO of SCVL, said, “Net income per share and operating income were both three times higher than the results of any prior third quarter. Store traffic was up over 40 percent and all of our comparable stores generated positive cash flow year to date. We are thankful to our millions of customers and over 5,000 team members for once again making us a Billion-Dollar Brand, as we aim to become a multibillion-dollar retailer in the years ahead.”

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Increased Guidance

Based on the continued business momentum and economic recovery, SCVL once again lifted its full-year fiscal 2021 guidance.

The company now expects FY21 earnings to be in the range of $5 per share to $5.10 per share, higher than the consensus estimate of $4.50 per share.

Moreover, full-year net sales are now projected to be between $1.285 billion to $1.290 billion, against the consensus estimate of $1.23 billion.

Analysts’ View

Impressed with Shoe Carnival’s solid beat, Williams Trading analyst Sam Poser lifted the price target on the stock to $60 (37.2% upside potential) from $52 while maintaining a Buy rating.  

The analyst’s optimistic view is driven by multiple factors including best-in-class vendor relationships, personalized customer engagement, and the best merchant and operational team in the footwear space. Moreover, he is encouraged by the new CEO’s growth plans with M&A becoming a part of his growth strategy since the company is debt-free, and has idle cash in hand.

Poser said, “The premium multiple is warranted, in our view, because SCVL will continue to gain market share through ongoing improvements in consumer engagement due to increased use of data provided by the CRM, and Nike’s decision to stop selling some competitors, many key vendors’ decisions to support SCVL.”

With 3 unanimous Buys, the SCVL stock has a Strong Buy consensus rating. The average Shoe Carnival price target of $51.33 implies 17.41% upside potential to current levels. Shares have exploded 144.4% over the past year.

Smart Score

According to TipRanks’ Smart Score rating system, Shoe Carnival scores a “Perfect 10” which indicates that the stock has strong potential to outperform market expectations.

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