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Caleres (CAL - Free Report) is a Zacks Rank #1 (Strong Buy) that is a footwear retailer and wholesaler. The company owns and operates a variety of footwear brands that include Dr. Scholl’s, Lifestride, Naturalizer and Veronica Beard. Caleres is also the holding company for Famous Footwear, which has over 1,000 retail stores.
This year has not been kind to investors, but for those in CAL, they are well in the green. The stock is actually up 15% on the year, which is more than most stocks can claim in 2022.
A late May, an earnings beat and guidance raise kept investors in the stock, despite market weakness. So, the question now for investors is if the strength continue. And if the market can stabilize, how high can CAL go?
About the Company
Formerly known as Brown Shoe Company, Caleres was founded in 1878 and is headquartered in St. Louis, Mo. It employs 5,200 people and has a market cap of almost $1 billion.
The company operates in two segments, its Famous Footwear Stores and its Brand Portfolio segment. The stock has Zacks Style Scores of “A” in Value and “B” in Growth.
The valuation aspect is attractive to investors as the stock sports a Forward PE of only 6. The stock also pays 1% dividend.
Q1 Earnings Beat and Strong Guidance
The company is coming off a 61% EPS beat in late May, which was the eight straight EPS surprise to the upside. Caleres also raised their FY22 guidance, hiking its annual sales and EPS outlook.
For FY22, they now see a range of $4.20-4.40 v the $3.88 expected. Sales are now expected +2-5% vs the prior 2% (y/y). Gross margins came in above last year’s levels and saw brand portfolio sales growth of 46%. This was a big offset to Famous Footwears decline of 3%.
Management said on the call that they are optimistic about their long-term prospects and potential for strong cash flows. They added: "We continue to view our stock as an attractive investment option and buying back shares as a prudent use of cash and expect to make ongoing purchases under the existing authorization during the remainder of 2022.”
Because of the earnings beat and guidance, Caleres showed it was quite different from the other footwear names out there. Investors rewarded the company by driving the stock higher and analysts are taking their estimates higher as well.
Analyst Estimates
For the current quarter, we have seen numbers taken up over the last 60 days, from $1.04 to $1.32 or 27%. For the current year, they have gone from $3.88 to $4.32, or 11%.
Looking down the road, it looks like analysts expect the momentum to continue. Over the last 60 days, next year’s numbers have gone from $4.16 to $4.64.
Looking at analyst commentary, they are impressed with the Brand Portfolio performance and gross margins. Additionally, analysts believe the guide suggests continued momentum into next year.
Some analyst price targets include Seaport Global with a Buy rating and $35 target, as well as Telsey Advisory with targets at $32.
The Technicals
The earnings report helped the stock move to 2022 highs. Since then, it has pulled back about 15% to the 50-day MA at $26. There has been a lot of consolidation in that as the overall market continues to struggle.
If the bulls can hold that 50-day and the market can stabilize, the stock could shoot back to post earnings highs around $30. From there, the stock has 161.8% Fibonacci extension targets above $36
The market might continue to struggle and if the stock does pull back, investors should be looking to buy the 200-day moving average. This level is currently at the $23.50 spot.
Bottom Line
Caleres is holding up well so far this year. Valuation and earnings strength should continue to give this name relative strength if the markets remain weak. And If investors get some confidence in the overall market, this could be a big winner into the end of the year.
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Bull of the Day: Caleres (CAL)
Caleres (CAL - Free Report) is a Zacks Rank #1 (Strong Buy) that is a footwear retailer and wholesaler. The company owns and operates a variety of footwear brands that include Dr. Scholl’s, Lifestride, Naturalizer and Veronica Beard. Caleres is also the holding company for Famous Footwear, which has over 1,000 retail stores.
This year has not been kind to investors, but for those in CAL, they are well in the green. The stock is actually up 15% on the year, which is more than most stocks can claim in 2022.
A late May, an earnings beat and guidance raise kept investors in the stock, despite market weakness. So, the question now for investors is if the strength continue. And if the market can stabilize, how high can CAL go?
About the Company
Formerly known as Brown Shoe Company, Caleres was founded in 1878 and is headquartered in St. Louis, Mo. It employs 5,200 people and has a market cap of almost $1 billion.
The company operates in two segments, its Famous Footwear Stores and its Brand Portfolio segment. The stock has Zacks Style Scores of “A” in Value and “B” in Growth.
The valuation aspect is attractive to investors as the stock sports a Forward PE of only 6. The stock also pays 1% dividend.
Q1 Earnings Beat and Strong Guidance
The company is coming off a 61% EPS beat in late May, which was the eight straight EPS surprise to the upside. Caleres also raised their FY22 guidance, hiking its annual sales and EPS outlook.
For FY22, they now see a range of $4.20-4.40 v the $3.88 expected. Sales are now expected +2-5% vs the prior 2% (y/y). Gross margins came in above last year’s levels and saw brand portfolio sales growth of 46%. This was a big offset to Famous Footwears decline of 3%.
Management said on the call that they are optimistic about their long-term prospects and potential for strong cash flows. They added: "We continue to view our stock as an attractive investment option and buying back shares as a prudent use of cash and expect to make ongoing purchases under the existing authorization during the remainder of 2022.”
Because of the earnings beat and guidance, Caleres showed it was quite different from the other footwear names out there. Investors rewarded the company by driving the stock higher and analysts are taking their estimates higher as well.
Analyst Estimates
For the current quarter, we have seen numbers taken up over the last 60 days, from $1.04 to $1.32 or 27%. For the current year, they have gone from $3.88 to $4.32, or 11%.
Looking down the road, it looks like analysts expect the momentum to continue. Over the last 60 days, next year’s numbers have gone from $4.16 to $4.64.
Looking at analyst commentary, they are impressed with the Brand Portfolio performance and gross margins. Additionally, analysts believe the guide suggests continued momentum into next year.
Some analyst price targets include Seaport Global with a Buy rating and $35 target, as well as Telsey Advisory with targets at $32.
The Technicals
The earnings report helped the stock move to 2022 highs. Since then, it has pulled back about 15% to the 50-day MA at $26. There has been a lot of consolidation in that as the overall market continues to struggle.
If the bulls can hold that 50-day and the market can stabilize, the stock could shoot back to post earnings highs around $30. From there, the stock has 161.8% Fibonacci extension targets above $36
The market might continue to struggle and if the stock does pull back, investors should be looking to buy the 200-day moving average. This level is currently at the $23.50 spot.
Bottom Line
Caleres is holding up well so far this year. Valuation and earnings strength should continue to give this name relative strength if the markets remain weak. And If investors get some confidence in the overall market, this could be a big winner into the end of the year.