Can Designer Brands Stock Bounce Back Ahead of Earnings?

DBI continues to see some weakness ahead of its Q3 earnings report

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Designer Brands Inc (NYSE:DBI) is one of North America’s largest designers, producers, and retailers of footwear and accessories. DBI's business segments include design and sourcing operations, a wholesaling business, and more than 1,000 points of distribution. The company operates a portfolio of retail concepts under the DSW Designer Shoe Warehouse, The Shoe Company, and Shoe Warehouse banners. They also design and produce footwear and accessories through Camuto Group for worldwide distribution.

Designer Brands is set to report its third-quarter earnings before the open on Tuesday, Dec. 7. DBI's senior leadership team will also host a conference call to discuss the results for investors following the press release detailing the footwear company's results. Wall Street analysts currently expect that Designer Brands will report earnings of $0.55 per share in this upcoming report.

Designer Brands stock is up about 67% in price year-over-year though a recent rally ran out of steam at the $17.50 area. Despite this, DBI is still trading well above its annual lows near the $7 level, with potential support at the 320-day moving average. 

dbi dec 2

Fundamentally, Designer Brands stock's valuation is intriguing at a forward price-earnings ratio of 11.75 and a price-sales ratio of 0.39. In addition, DBI’s revenue and net income are still down 20% and $209 million, respectively, since fiscal 2019. This leaves a decent margin for growth just from Designer Brands recovering to previously achieved levels.

However, DBI does has a very weak balance sheet with $59.58 million in cash and $1.25 billion in total debt, leaving the footwear company exposed to other unanticipated potential complications in the future. Nonetheless, at a market capitalization of $1.02 billion, Designer Brands stock could prove to be big winner in the long run.

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