What a brutal six months it’s been for Shoe Carnival. The stock has dropped 48.2% and now trades at $17.69, rattling many shareholders. This was partly due to its softer quarterly results and might have investors contemplating their next move.
Is there a buying opportunity in Shoe Carnival, or does it present a risk to your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free .
Why Do We Think Shoe Carnival Will Underperform?
Despite the more favorable entry price, we're sitting this one out for now. Here are three reasons why we avoid SCVL and a stock we'd rather own.
1. Shrinking Same-Store Sales Indicate Waning Demand
Same-store sales is a key performance indicator used to measure organic growth at brick-and-mortar shops for at least a year.
Shoe Carnival’s demand has been shrinking over the last two years as its same-store sales have averaged 6.4% annual declines.
2. Fewer Distribution Channels Limit its Ceiling
With $1.20 billion in revenue over the past 12 months, Shoe Carnival is a small retailer, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with suppliers.
3. Revenue Projections Show Stormy Skies Ahead
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect Shoe Carnival’s revenue to drop by 1.4%, a decrease from its 3% annualized growth for the past five years. This projection is underwhelming and implies its products will face some demand challenges.
Final Judgment
Shoe Carnival doesn’t pass our quality test. Following the recent decline, the stock trades at 6× forward price-to-earnings (or $17.69 per share). While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are more exciting stocks to buy at the moment. We’d suggest looking at an all-weather company that owns household favorite Taco Bell .
Stocks We Like More Than Shoe Carnival
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 5 Strong Momentum Stocks for this week . This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free .
