"On attractive risk/reward following a rare dislocation following 1Q earnings, with a 3% dividend yield, $6/net cash per share and catalysts, we recommend buying ahead of the inflection," the firm said in a note.
The firm set a price target of $35, up from $27.
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 revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, increase in net income and growth in earnings per share. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- DSW's revenue growth has slightly outpaced the industry average of 2.2%. Since the same quarter one year prior, revenues slightly increased by 0.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving 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 1.26, which illustrates the ability to avoid short-term cash problems.
- The net income growth from the same quarter one year ago has exceeded that of the Specialty Retail industry average, but is less than that of the S&P 500. The net income increased by 11.9% when compared to the same quarter one year prior, going from $34.52 million to $38.64 million.
- DSW INC has improved earnings per share by 12.0% 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 year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, DSW INC increased its bottom line by earning $1.64 versus $1.60 in the prior year. For the next year, the market is expecting a contraction of 5.5% in earnings ($1.55 versus $1.64).
- You can view the full analysis from the report here: DSW Ratings Report