NEW YORK (TheStreet) -- Analysts at Canaccord Genuity lowered their price target on DSW (DSW) - Get Designer Brands Inc. Class A Report stock to $37 from $46 this morning, while maintaining their "buy" rating.
Yesterday, DSW reported earnings results for the 2015 second quarter of 42 cents per share, compared to Canaccord's estimate of 44 cents per share. The weaker-than-expected numbers were driven mostly by lower revenue and gross margin.
"Overall, we are disappointed by the weak comp and feel the company could have done a better job in communicating the potential comp impact from last year's elevated clearance activity, as we (among others) were caught off guard," the firm said in a note.
Despite the weak second quarter, Canaccord says its does not expect a weaker third quarter and that DSW's athletics and women's boots coverage is strong.
Shares of DSW were up 2.67% at $28.08 in early afternoon trading on Wednesday.
Separately, TheStreet Ratings team rates DSW INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate DSW INC (DSW) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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. Although other factors naturally played a role, the company's strong earnings growth was key. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- DSW INC has improved earnings per share by 26.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, DSW INC increased its bottom line by earning $1.69 versus $1.64 in the prior year. This year, the market expects an improvement in earnings ($1.90 versus $1.69).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Specialty Retail industry average. The net income increased by 22.6% when compared to the same quarter one year prior, going from $38.64 million to $47.37 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 10.5%. Since the same quarter one year prior, revenues slightly increased by 9.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- DSW has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.10, which illustrates the ability to avoid short-term cash problems.
- You can view the full analysis from the report here: DSW Ratings Report