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Shoe Carnival Inc. Message Board

  • floppy_6 floppy_6 Aug 24, 2012 5:04 PM Flag

    SCVL cheap or not?

    It is all depending on how you measure it.

    On conventional PE basis, SCVL is selling at 15 vs. Shoo at 15 and DSW at 19.6.

    But SCVL has a inventory policy to keep any sizes available giving any shoes in the store. Their policy is to never, never let customers walk away without being able to find the right size. So, they kept inventory 1.6 times larger than the sales vs. DSW only at 0.7 times of sales. So, keep in mind, their inventory are all current, nothing obsoleting. And, they are ready to convert back to cash.

    So, with this in mind, if you measure this from EV basis (=current asset - total debt), SCVL is only selling at 8.5 times EV/E in comparison with DSW at 16 times.

    Least three analysts uppered target price to $28 to open the room for upward move with a beat earning.

    On the other hand, Stern Agee stick with the conventional PE method and call it reaching its target price $23. Therefore downgraded.

    I would argue Sterne for not counting the true value at its inventory - which is next akin to cash.

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