Head to Head Survey: Designer Brands (NYSE:DBI) & Shoe Carnival (NYSE:SCVL)

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

Institutional and Insider Ownership

97.1% of Shoe Carnival shares are owned by institutional investors. Comparatively, 79.5% of Designer Brands shares are owned by institutional investors. 23.6% of Shoe Carnival shares are owned by insiders. Comparatively, 17.4% of Designer Brands shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Dividends

Shoe Carnival pays an annual dividend of $0.32 per share and has a dividend yield of 1.2%. Designer Brands pays an annual dividend of $1.00 per share and has a dividend yield of 5.5%. Shoe Carnival pays out 13.1% of its earnings in the form of a dividend. Designer Brands pays out 60.2% 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 increased its dividend for 6 consecutive years.

Profitability

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

Net Margins Return on Equity Return on Assets
Shoe Carnival 3.81% 12.20% 7.57%
Designer Brands -0.41% 15.85% 7.73%

Risk and Volatility

Shoe Carnival has a beta of 1.06, meaning that its share price is 6% more volatile than the S&P 500. Comparatively, Designer Brands has a beta of 1.25, meaning that its share price is 25% more volatile than the S&P 500.

Earnings & Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Shoe Carnival $1.03 billion 0.38 $38.13 million $2.45 10.84
Designer Brands $3.18 billion 0.45 -$20.47 million $1.66 10.92

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

Analyst Ratings

This is a summary of current ratings and price targets for Shoe Carnival and Designer Brands, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Shoe Carnival 0 1 5 0 2.83
Designer Brands 0 2 0 1 2.67

Shoe Carnival currently has a consensus target price of $39.75, suggesting a potential upside of 49.60%. Designer Brands has a consensus target price of $24.00, suggesting a potential upside of 32.38%. Given Shoe Carnival’s stronger consensus rating and higher probable upside, analysts clearly believe Shoe Carnival is more favorable than Designer Brands.

Summary

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

About Shoe Carnival

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.

About Designer Brands

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.

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