Financial Analysis: Designer Brands (DBI) versus Shoe Carnival (SCVL)

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Designer Brands (NYSE:DBI) and Shoe Carnival (NASDAQ:SCVL) are both small-cap retail/wholesale companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, valuation, profitability, analyst recommendations, risk, dividends and earnings.

Dividends

Designer Brands pays an annual dividend of $1.00 per share and has a dividend yield of 4.9%. Shoe Carnival pays an annual dividend of $0.32 per share and has a dividend yield of 1.0%. Designer Brands pays out 60.2% of its earnings in the form of a dividend. Shoe Carnival pays out 13.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Shoe Carnival has raised its dividend for 6 consecutive years.

Analyst Ratings

This is a summary of current ratings for Designer Brands and Shoe Carnival, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Designer Brands 0 1 0 1 3.00
Shoe Carnival 0 1 5 0 2.83

Designer Brands presently has a consensus price target of $24.00, indicating a potential upside of 18.40%. Shoe Carnival has a consensus price target of $41.50, indicating a potential upside of 28.44%. Given Shoe Carnival’s higher possible upside, analysts plainly believe Shoe Carnival is more favorable than Designer Brands.

Profitability

This table compares Designer Brands and Shoe Carnival’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Designer Brands -0.64% 14.76% 9.03%
Shoe Carnival 3.70% 12.42% 8.61%

Valuation & Earnings

This table compares Designer Brands and Shoe Carnival’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Designer Brands $3.18 billion 0.50 -$20.47 million $1.66 12.21
Shoe Carnival $1.03 billion 0.47 $38.13 million $2.45 13.19

Shoe Carnival has lower revenue, but higher earnings than Designer Brands. Designer Brands is trading at a lower price-to-earnings ratio than Shoe Carnival, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Designer Brands has a beta of 1.07, meaning that its share price is 7% more volatile than the S&P 500. Comparatively, Shoe Carnival has a beta of 0.76, meaning that its share price is 24% less volatile than the S&P 500.

Institutional and Insider Ownership

85.5% of Designer Brands shares are held by institutional investors. Comparatively, 91.1% of Shoe Carnival shares are held by institutional investors. 17.4% of Designer Brands shares are held by company insiders. Comparatively, 22.7% of Shoe Carnival shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

Shoe Carnival beats Designer Brands on 10 of the 18 factors compared between the two stocks.

Designer Brands Company Profile

Designer Brands Inc. designs, producers, and retails footwear and accessories for women, men, and kids primarily in North America. It operates through three segments: The U.S. Retail, the Canada Retail, and the Brand Portfolio. The company also provides handbags, hosiery, jewelry, and other accessories. The company offers its products under the Vince Camuto, Louise et Cie, Sole Society, CC Corso Como, Enzo Angiolini, Jessica Simpson, Lucky, and other brands. It operates vincecamuto.com and solesociety.com e-commerce sites. As of March 19, 2019, it operated a portfolio of retail concepts in approximately 1,000 locations under the DSW Designer Shoe Warehouse, The Shoe Company, and Shoe Warehouse banners. Designer Brands Inc. is based in Columbus, Ohio.

Shoe Carnival Company Profile

Shoe Carnival, Inc., together with its subsidiaries, operates as a family footwear retailer in the United States. The company offers various dress, casual, and athletic footwear products for men, women, and children; and accessories, such as socks, belts, shoe care items, handbags, sport bags, backpacks, scarves, and wallets. As of February 2, 2019, it operated 397 stores in 35 states and Puerto Rico. The company also sells its products through online shopping at shoecarnival.com. Shoe Carnival, Inc. was founded in 1978 and is based in Evansville, Indiana.

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