Market expectations
Ahead of this earnings report, analysts are forecasting strong results, expecting year-on-year revenue growth of 14.2% to $336.3m. This would mark a significant recovery after the 5.7% decline recorded in the same quarter last year. Adjusted earnings per share should reach $0.83, reflecting confidence in the company's ability to maintain momentum.
Interestingly, analysts have largely maintained their earnings forecasts for Shoe Carnival over the past 30 days, indicating stable expectations ahead of the earnings announcement. However, it is important to note that Shoe Carnival has missed earnings estimates six times in the past two years, highlighting the volatility we need to be mindful of.
Peer comparisons and sector performance
Recent results from companies such as Foot Locker and Boot Barn provide insight into sector performance. Foot Locker reported modest year-on-year revenue growth of 1.9%, in line with market expectations, but resulting in a 4.6%[1] fall in its post-earnings share price. In contrast, Boot Barn outperformed, with sales up 10.3%, beating estimates by 1.6% and leading to a 13.7%[2] rise in its share price.
The clothing and footwear retail sector has seen some optimism in recent weeks, with the average share price rising 1.9% over the past month. However, Shoe Carnival's[3] shares have lagged, falling 2.7% over the same period. Still, the average analyst price target for Shoe Carnival remains at $50.5, indicating significant upside potential from the current share price of $38.06. [1]
Strategic Considerations for Investors
The key question for investors is whether Shoe Carnival can meet or exceed expectations and reverse its recent underperformance relative to peers. Projected double-digit revenue growth and an improved earnings outlook could position the company favourably, but a history of missed targets suggests that caution is warranted.
Given the mixed performance of its competitors and the recent resilience of the broader sector, there is potential for a positive market reaction if Shoe Carnival meets its guidance. However, I plan to remain vigilant and weigh the risks and opportunities presented by the upcoming news.
Conclusion
Shoe Carnival's upcoming results could be a turning point for this stock, especially if the company can beat expectations and demonstrate consistent growth. As always, maintaining a balanced view and keeping a close eye on tomorrow's results will be essential to making informed investment decisions.
[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or based on the current economic environment which is subject to change. Such statements are not guaranteeing of future performance. They involve risks and other uncertainties which are difficult to predict. Results could differ materially from those expressed or implied in any forward-looking statements.
[1] Foot locker's stock price performance over the past five years: https://tradingeconomics.com/fl:us
[2] Boot Barn's stock price performance over the past five years: https://finance.yahoo.com/quote/BOOT/
[3] Shoe Carnival's stock price performance over the past five years: https://tradingeconomics.com/scvl:us