Hot Stocks: Genesco, Dick’s Sporting Goods, VF Corp.

No company is immune to the stock market’s turbulence in recent weeks. But even amid the recent massive sell-offs, analysts continue to display confidence in several shoe stocks.

As always, Footwear News is keeping you in the know.

Read on for three footwear and apparel stocks that analysts give a thumbs up.

Genesco Inc.
After the firm announced it was tightening its turnaround efforts for Lids Sports Group, which had been burdening profit margins for some time, market watchers got increasingly bullish on the stock.

The company said on Tuesday that it had sold Lids Team Sports, part of Lids Sports Group, to BSN Sports and beefed up its share-repurchase program. On Wednesday, Piper Jaffray upgraded the stock.

Since October, Genesco shares have been upgraded by several firms, including Sterne Agee CRT, CL King & Associates and Morgan Stanley.

“Sale of Lids Team Sports and new buy-back authorization reinforces Genesco as a top pick for the year,” wrote Sterne Agee CRT analyst Sam Poser on Jan. 20. “ … We believe Genesco will generate high teens (we are forecasting 19 percent) earnings-per-share growth in FY17, even with low-single-digit revenue growth. Trends remain strong at Journeys, and we believe our 2.3 percent same-store-sales estimate for FY17 is very base-case.”

“Consolidated EPS growth will be achieved via margin recovery, largely through Lids, where we believe the business can recoup over 200 basis points in EBIT margin,” Poser added.

Dick’s Sporting Goods

With competitor The Sports Authority facing financial challenges, Dick’s Sporting Goods should benefit in a major way, market watchers say.

“Should Sports Authority close stores, Dick’s Sporting Goods would be the most direct beneficiary, as its chief competitor would be crippled,” wrote Canaccord Genuity Inc. analyst Camilo Lyon on Jan. 21. “That said, we believe the benefits would come over time, as closing stores can be a lengthy process … The bottom-line takeaway is that consolidation favors the leader (Dick’s) over the medium term. More importantly, it should help shift sentiment on the stock to positive now that there is an underlying potential for a positive shift in the competitive dynamic.”

Lyon, Poser and Susquehanna Financial LLLP analyst Christopher Svezia all give the company’s stock a buy or positive rating.

VF Corp.

VF Corp. has gotten mixed reviews lately, due mostly to the unseasonably warm start to winter and its weather-dependent brands, including Timberland and The North Face. But despite a few uncontrollable challenges, including a generally tougher retail environment, most analysts agree that VF is a solid company with a portfolio of healthy, well-managed brands.

Last week, Sterne Agee CRT upgraded the stock to neutral, while Telsey Advisory Group and Piper Jaffray rate the stock “outperform” and “overweight,” respectively. Svezia also gives the stock a positive rating.

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