Here's Why Shoe Carnival Stock's Current Value May Be Deceiving

SCVL looks to kick off 2021 earnings on a positive note tomorrow

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Shoe Carnival, Inc. (NASDAQ:SCVL) is an American footwear retailer. The company operates 383 stores throughout approximately 30 states in the Midwest, South, and Southeast regions of the U.S. Shoe Carnival primarily sells men's, women's, children's, and athletic footwear catergories through their retail stores. SCVL stores also offer accessories such as handbags, wallets, shoe care items, and socks. The company offers both name brand and private label merchandise.

Last week, Shoe Carnival announced that its first-quarter earnings results will be released after the market closes on Wednesday, May 19. SCVL will also host a quarterly conference call to discuss the first-quarter results that same day.

Shoe Carnival has managed to beat earnings expectations on three out of its last four earnings reports released. For the first quarter of 2020, SCVL missed analyst estimates by a margin of $0.53, and reported a loss of -$1.16 per share. For the second quarter of  2020, Shoe Carnival stock's earnings per share (EPS) skyrocketed back into positive territory up to $0.71, and beat expectations by a margin of $0.10. For the third quarter of 2020, SCVL reported another increase in earnings, rising to $1.03 per share and beating estimates by a wide margin of $0.33. For the final quarter of 2020, Shoe Carnival reported an EPS of $0.52 and beat expectations by a margin of $0.01. Analysts are forecasting a first-quarter EPS of $1.40 for tomorrow.

SCVL is up about 163% over the past 12 months, with ongoing support at the 60-day moving average. Additionally, the security came within striking distance of its May 10 record high of $66.28 earlier today. The company also offers a $0.56 forward dividend, which is equivalent to a dividend yield of 0.85%.

From a fundamental point of view, Shoe Carnival stock may be considered a decent value play. The company still has a small market cap of $932 million, making it easier for SCVL to increase in value. Shoe Carnival has displayed consistent growth prior to 2020 when the Covid-19 pandemic hit. Between 2018 and 2019, SCVL increased revenues by a modest 1.7%. The firm also grew its net income by a considerable 127% during that same period of time. SCVL revenues did fall about 6% in 2020. Additionally, the company’s net income took an even harder hit in 2020, dropping by 63% year-over-year. As a result, Shoe Carnival stock has been trading at a very high price-earnings ratio of 58.71. However, SCVL's forward price-earnings ratio of 15.77 is much better indicator of the stock’s intrinsic value.

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