DSW Inc. - Value

DSW Inc. (DSW) recently raised fiscal 2010 guidance after seeing solid second quarter sales.

DSW sells footwear and other accessories through 310 stores in 39 states. It also operates an e-commerce web site and supplies footwear to 353 leased locations in the United States.

Same Store Sales Jump

On Aug 4, DSW announced second quarter sales increased 12.3% to $415.1 million from $369.5 million in the year ago period. Same store sales were smoking hot, rising 12% compared to a decrease of 2.9% last year.

Over the first half of the fiscal year, same store sales rose 14.1% versus a decrease of 3.8% in fiscal 2009. Do shoppers really like shoes that much better in 2010? Apparently the answer is "yes."

Raised Guidance

For the second time in 2010, DSW raised its full year guidance. It now expects earnings per share between $1.80 and $1.95 compared to its prior April guidance of $1.65 to $1.75.

DSW made $1.23 in fiscal 2009.

Zacks Consensus Estimates Rise

Given the company's guidance revision, it's not surprising that 5 estimates also rose in the last 30 days which boosted the fiscal 2010 Zacks Consensus to $1.93 from $1.78 per share.

This is at the high end of the company's range and would be earnings growth of 56.8% over fiscal 2009.

DSW is expected to report second quarter results on Aug 26.

Value Fundamentals

DSW is still a value stock. It is cheaper than when I last reviewed it in June, as it's trading at just 12.8x forward estimates compared to 14.7x in June.

Its price-to-book ratio is also still an attractive 1.9. DSW also has a 1-year return on equity (ROE) of 15%, well above the industry average of 11.9%.

DSW is now a Zacks #2 Rank (buy) stock.

Read the June 4, 2010 article.

Update to Previous Value Zacks Rank Buy Stocks

The Andersons, Inc. (ANDE) continues to rebound from the downturn in agriculture as the grain and ethanol division recently posted record second quarter results. Read the full article.

World Fuel Services Corporation (INT) easily beat the Zacks Consensus Estimate for the second quarter as its land fuel products segment saw record gross profit. The company has surprised 4 quarters in a row by an average of 54.17%. INT has a stellar 5-year average return on equity (ROE) of 16.31%. Read the full article.

Quaker Chemical Corporation (KWR) has surprised 6 quarters in a row as its stock has rebounded along with the global economy. Read the full article.

Kulicke & Soffa Industries, Inc. (KLIC) is dirt cheap at just 3x forward earnings despite recently posting a big earnings surprise. Read the full article.

 
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