Update: Shoe Carnival Earnings Give Longs A Reason To Do Cartwheels

| About: Shoe Carnival, (SCVL)
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Summary

Shoe Carnival reported awesome fiscal third-quarter earnings.

The report raised further my confidence in Shoe Carnival stock.

I anticipated a great report, and it beat estimates across all metrics.

In my previous Shoe Carnival (NASDAQ:SCVL) article entitled "If You Can Beat 'Em, Join 'Em: Why I'm Loading Shoe Carnival Ahead Of Earnings," I made a case that SCVL would surprise to the upside, specifically from boot sales. Competitor DSW Inc. (NYSE:DSW) reported great numbers that it attributed to boot sales, and SCVL was already running double-digit boot sale comps over the summer. In my article, I stated, among other things:

"Now my plan is to go long the beaten-down SCVL for several reasons. First is the possibility of strong boot sales for this company too. In November of last year, SCVL mentioned double-digit percentage growth in boot sales which made same-store sales leap 7.8% for the month thanks to the cold weather and early storms. The upcoming report is for the period ending in October, and I'm speculating that, as I speculated was the case with DSW, those who normally wait until November to pick up their winter boots are being more proactive this year and doing so in October. If I'm right, CRVL could see a surprise boost like DSW did."

SCVL third-quarter earnings are now out, and it was a beat across all metrics. Net sales jumped 8.0% to $254.7 million, compared to the $248.8 million estimate. Same-store sales popped 2.3%. Earnings per diluted share were flat at $0.54, but well above the $0.48 per share estimate. "These results reflect strong sales in our fashion boot category," was the first thing CEO Cliff Sifford credited. SCVL guided for the holiday quarter to show between $0.06 and $0.10 in EPS, compared to $0.03 a year ago and the $0.09 estimate. Same-store sales were guided at between 3% and 5% growth, along with overall sales of between $218 million and $222 million, compared to the $217.5 million estimate.

I think it's safe to say analysts will be raising their estimates of $1.40 for next year. Based on the close prior to the report, SCVL was already trading with a modest-looking P/E of 14. The great quarter and guidance should give investors confidence and perhaps expand the multiple it trades at. Add higher estimates along with a higher multiple, and SCVL is going higher.

Disclosure: The author is long SCVL.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.