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Genesco Inc. (GCO - Free Report) is growing through both organic and M&A efforts, which has analysts seeing dollar signs.

Growth rates are rising, shares are cheap and the stock has a Zacks #1 Rank (Strong Buy).

Company Description

Genesco sells footwear, sports apparel, headwear and accessories at more than 22,000 locations. Brands include Journeys, Lids and several others.

Comps Up 14%

The last quarterly report came out on May 26 and showed solid top-line growth, driven by a 14% increase in same-store sales. Total sales were up 20%, to $482 million.

Growth on the bottom line was even more impressive. Income from continuing operations rose 74%. Net income came in at $15.7 million, or $0.67 per share. The Zacks Consensus Estimate was just $0.47, giving Genesco its third consecutive surprise and the company hasn't missed since early 2008.

New Acquisition

On Jun 23 Genesco announced that it bought Schuh Group, which has similar offerings but is in the U.K. and Ireland. This gives Genesco 59 more stores and 16 concessions. An existing credit facility and cash on hand were used to make the deal.

Estimates Jump

Full-year estimates continue to climb. The average estimate for fiscal 2012 rose 14 cents on the quarterly report and another 24 cents in just the past week, to $3.22. Next year's jumped 17 cents and then 32 cents, to $3.79.

Last year Genesco made $2.48 per share, so the projected growth rates are now 30% and 18%, respectively.


Shares of GCO are trading at about 17 times forward estimates, which doesn't exactly scream value. But, with a 15.5% long-term growth rate the PEG is at 1.1 a good price for growth.

The price to sales is 0.7 times and the price to book is 2.0, both solid multiples.

The Chart

The long-term earnings trend looks great, just look how quickly estimates are moving. Below is a chart that plots the consensus estimates for the past 5 years. You can that not only are estimates higher year over year right now, but they also have a tendency to rise throughout the year.

Genesco Inc.  - ticker GCO>

Bill Wilton is the Aggressive Growth Stock Strategist for He is also the Editor in charge of the Zacks Small Cap Trader service

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