Shares of Designer Brands (DBI, Financial) plummeted by 11.7% following the release of its second-quarter earnings report. The significant drop was fueled by a miss in same-store sales expectations, which consequently led to the company failing to meet its revenue and EPS targets.
Designer Brands Inc, trading at $5.13, faced a tough market reaction with a 11.7% decrease in stock price. The company's financial indicators reveal a mixed bag of performance metrics. On a positive note, the stock offers a dividend yield close to its 3-year high and the price-to-book (PB) ratio is also near a 3-year low. This might appeal to dividend-seeking investors.
However, several warning signs accompany these positives. Designer Brands (DBI, Financial) has an Altman Z-score of 1.8, placing it in the distress zone, indicating a possibility of bankruptcy within the next two years. Additionally, the firm has been consistently issuing new long-term debt—$285.658 million over the past three years. The company's return on invested capital (ROIC) stands at 2.48%, which is below its weighted average cost of capital (WACC), suggesting inefficient use of capital.
In terms of valuation, Designer Brands (DBI, Financial) has a GF Value estimate of $13.79, indicating a potential value trap. To explore further details on GF Value, please visit GF Value.
Additional financial metrics show the company’s PE ratio at 23.53 and a price-to-sales (PS) ratio at 0.12, which is quite low, positioned close to its 3-year low. Furthermore, the recent quarter reported a revenue of $746.6 million.
Designer Brands (DBI, Financial) operates primarily in the footwear and accessories sector, with its well-known DSW Designer Shoe Warehouse banner leading its U.S. Retail segment. Despite these established retail operations, the company faces significant headwinds as evidenced by its recent stock performance and financial warnings.
