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Analyzing DSW’s Valuation

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Forward PE

As of January 10, DSW (DSW) was trading at a 12-month forward PE (price-to-earnings) multiple of 13.0x. Following the fiscal 3Q17 results, DSW’s valuation multiple has increased 2.4%.

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Peer comparison

The company is trading at a higher valuation multiple than its peers. Foot Locker (FL) is trading at a 12-month forward PE ratio of ~11.0x, while Genesco (GCO) is trading at a 12-month forward PE ratio of 10.5x. On the other hand, Finish Line (FINL) is trading at a 12-month forward PE of 17.7x as of January 10—higher than DSW.

Analysts’ estimates

For DSW, analysts project that fiscal 2017 revenues will be up 3.6% to $2.8 billion while fiscal 2018 revenues are expected to be up 1.4%. For fiscal 2017, the company’s EPS are expected to be down 3.0% to $1.42 on an adjusted basis, and for fiscal 2018, EPS are expected to increase 11.4% to $1.58.

In comparison, for Foot Locker in fiscal 2017, analysts expect revenues to be up 0.3% to $7.8 billion, but EPS are projected to be down 15.4% to $4.08. For fiscal 2018, analysts expect revenues to fall ~1.0% to $7.7 billion while earnings are projected to rise 3.8% to $4.23 per share.

For fiscal 2018, analysts estimate Finish Line revenues to increase 0.6% to $1.9 billion while EPS are expected to be down 37.2% to $0.67. The company’s fiscal 2019 revenues are projected to be down 1.4% to $1.8 billion, and EPS are expected to increase ~15.0% to $0.77.

Genesco’s revenues are expected to be up 0.2% to $2.9 billion, and EPS is expected to decline 29.2% to $3.07 in fiscal 2017. For fiscal 2018, sales are projected to be down 0.1% to $2.9 billion, whereas EPS are likely to increase 7.0% to $3.28.

In the final part of this series, we take a look at what analysts have to say about DSW stock.

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