Bear of the Day: DSW (DSW) - Bear of the Day
25 Aprile 2013 - 6:04AM
Zacks
For the last few years, DSW (DSW) has been a
pretty hot stock. The company has managed to beat out many of its
consumer discretionary peers and do quite well in the
post-recessionary environment.
In fact, DSW has surged more than 300% in the trailing five year
period, thoroughly crushing the S&P 500 in the process. Much of
these gains were the result of consumers looking for bargains at
their stores, and with the economy slowly improving, there are
concerns about some trading up to the next level.
This is largely due to a bullish stock market, a return in
housing prices, and better job prospects. All of which makes people
feel richer and better about their future, a situation that may not
always be great news for discount companies like DSW.
These trends are finally starting to catch up to DSW in 2013, as
the company has seen its share price flounder, and investor
perception of the company change. The stock is actually down about
4% YTD, and many are expecting this trend to continue in the near
term.
Earnings Picture
This shift in perception is largely due to the poor earnings
outlook for DSW in both the current quarter and current year
figures. In both of these time frames, there is universal agreement
among analysts to move estimates lower, with similar projections
hitting the next quarter and next year consensuses as well.
Furthermore, the magnitude of the decline has also been pretty
terrible, as the consensus has declined dramatically in just a two
month time frame. The current quarter figures have seen a nearly
20% decline in the past two months, while the current year numbers
have fallen by nearly 10% in the same time frame.
It also doesn’t help that in the company’s latest earnings
report it missed expectations, marking the first time since 2010
that it failed to beat the consensus. Combine this miss, the huge
run up in DSW shares, and a broad pull away from consumer stocks as
of late, and you have a recipe for disaster in the short term.
Thanks to this, DSW currently has a Zacks Rank of 5 or ‘Strong
Sell’, meaning that it will likely underperform the broad market in
the short term. Furthermore, the stock has a Zacks Recommendation
of ‘underperform’ meaning that the longer term picture isn’t too
favorable either.
![](http://staticzacks.net/images/zacks/blogs/1366828080_scaled_425.jpg)
Better Options
DSW isn’t looking like a great pick from an earnings
perspective, and it doesn’t look like this trend will reverse any
time soon. So, it could be time to sell this stock, or at least
avoid the firm until its outlook improves.
Fortunately for investors looking to stay in the retail segment
of the consumer market though, there are a few more favorably
Ranked options out there. Any of these could potentially be better
plays than the struggling DSW for those who are looking to stay in
the broad consumer space.
In the Zacks Industry of Retail-Apparel and Shoes, we have found
two stocks with Zacks Ranks of 2 or ‘Buy’. Either of these
companies, Buckle (BKE) or Joseph A. Bank
(JOSB), could make for interesting picks instead of the
sluggish DSW.
Both of these stocks are seeing more positive trends in their
earnings estimate figures, and look to avoid at least some of the
woes that are impacting DSW. Furthermore, both recently saw a move
from a Zacks Rank of 3 or ‘Hold’ up to their current ranks of buy,
suggesting that now could be a good time to shop for these stocks
instead.
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BUCKLE INC (BKE): Free Stock Analysis Report
DSW INC CL-A (DSW): Free Stock Analysis Report
JOS A BANK CLTH (JOSB): Free Stock Analysis Report
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