NEW YORK (
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 8.0%. Since the same quarter one year prior, revenues slightly increased by 1.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has significantly increased by 2084.79% to $79.90 million when compared to the same quarter last year. In addition, BROWN SHOE CO INC has also vastly surpassed the industry average cash flow growth rate of 1.55%.
- 40.50% is the gross profit margin for BROWN SHOE CO INC which we consider to be strong. Regardless of BWS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 0.30% trails the industry average.
- BROWN SHOE CO INC's earnings per share declined by 50.0% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, BROWN SHOE CO INC reported lower earnings of $0.20 versus $0.85 in the prior year. This year, the market expects an improvement in earnings ($0.88 versus $0.20).
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
Brown Shoe Company, Inc. operates as a footwear retailer and wholesaler in the United States, Canada, China, and Guam. It provides licensed, branded, and private-label casual, dress, and athletic footwear products to women, men, and children. The company has a P/E ratio of 72.7, above the average specialty retail industry P/E ratio of 21.9 and above the S&P 500 P/E ratio of 17.7. Brown Shoe has a market cap of $498.5 million and is part of the
industry. Shares are up 30.7% year to date as of the close of trading on Tuesday.
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-- Written by a member of TheStreet Ratings Staff
TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.