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Small-Cap Dividend Spotlight: Designer Shoe Warehouse

Published Mon, 14 May 2018 14:02:51 -0400 on Seeking Alpha

I've been covering a lot of consumer retail stocks lately and it's a mixed bag of companies that are struggling and those that at are actually doing quite well. The good thing is that all these companies, whether doing good or bad, are generally being discounted because of fears that Amazon (AMZN) and other online retailers will continue disrupting the market. This leaves the opportunity to buy many stocks at a deep discount. In my opinion, Designer Shoe Warehouse (DSW) is one of those stocks and I believe now is a good time to buy based on the following:
2018 guidance is positive with the expectation for adjusted revenue growth, adjusted earnings growth, and comparable store sales growth. DSW has an excellent balance sheet with no debt, which provides the opportunity to make strategic acquisitions or invest in other growth initiatives. No debt also helps lead to a low EV/FCF of 11.96x, which is attractive relative to peers. DSW's annual dividend yield is 4.17% and well-supported by free cash flow. I project 34% upside potential based on a discounted cash flow model. DSW Financial Snapshot Most of DSW's operating trends have been positive. During 2017, sales increased 3.3% and adjusted EPS increased 4.1% to $1.52. Tax reform resulted in an after-tax charge of $55 million, which was the majority of the difference between GAAP EPS and adjusted EPS.

Data Source: DSW SEC Filings Note - 2017 fiscal year end was February 3rd, 2018 The gross margin decline... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
DSW 22.51   0.0 -0.28 1.00 4.50


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