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Bull of the Day: Shoe Carnival (SCVL)

Tracey Ryniec

Shoe Carnival, Inc. (SCVL) expects to have a strong end to fiscal 2018. This Zacks Rank #1 (Strong Buy) just raised full year comparables and EPS guidance for the second time in three months.

Shoe Carnival is one of the largest footwear retailers in America, with 402 stores in 35 states and Puerto Rico as well as online sales at shoecarnival.com. It's a small cap company with a market cap of just $588 million which sells men's, women's and children's moderately priced footwear.

Raised Full Year Fiscal 2018 Guidance Again

On Jan 14, ahead of its appearance at the ICR Conference on the same day, Shoe Carnival raised its full year fiscal comparable and earnings guidance for the second time in the last 3 months.

Comparable store sales are now expected to be 4% for the year, up from the Nov 15, 2018 guidance of just 3.5%.

Earnings are expected in the range of $2.41-$2.43, up from November's forecast of $2.36-$2.38.

That's earnings growth of 59.7% as the company made just $1.49 in fiscal 2017.

It doesn't report fourth quarter and fiscal 2018 results until Mar 28, 2019 so investors will have to wait until then to learn just how good the earnings season really was.

But it obviously was well received as the comparables jumped by 0.5% which is a big jump in retail.

In Q3, the company said all segments were strong but it saw strength in boot, casual and athletic categories. It was also effectively managing inventory.

Bullish Guidance for Fiscal 2019

Shoe Carnival also introduced its first fiscal 2019 earnings guidance.

It's forecasting $2.60-$2.70 which is in line with current analyst expectations.

The Zacks Consensus Estimate is looking for $2.63, but that's with just one estimate. It's still up from just 60 days ago when the Zacks Consensus was calling for $2.40.

New Share Repurchase Program

Shoe Carnival was already in the midst of a $50 million share repurchase program which was set to expire on Dec 31, 2018.

As of Dec 17, only $4 million still remained under that authorization. Shoe Carnival implied that it could be completed by the expiration date.

But the Board also reauthorized another $50 million beginning Jan 1, 2019 through Dec 31, 2019.

Shoe Carnival also pays a dividend, currently yielding 0.8%.

It's unusual for a small cap company to do both share buybacks and pay a dividend.

Shares Still Up Big

Despite the market sell off to end 2018, Shoe Carnival shares are still up 54.7% over the last year, including 13% to start 2019.

Shares are still attractively valued, however, with a forward P/E of just 15.9.

Shoes are a hot part of retail again but they're being ignored by investors. Competitor DSW (DSW) is also attractively priced with a forward P/E of just 14.4 and it too is a Zacks Rank #1 (Strong Buy).

For investors looking for a retailer with growth which is also shareholder friendly, Shoe Carnival should be on the short list.

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