On Wednesday, Loop Capital adjusted its outlook for Caleres (NYSE:CAL), a footwear company, raising the price target to $45 from $40, while keeping a Buy rating on the stock. The revision comes after Caleres reported a record free cash flow (FCF) of $4.56 per share in 2023. The company's adjusted earnings per share (EPS) of $4.18 slightly exceeded Loop Capital's predictions by three cents and marked the third year in a row that Caleres has posted an EPS above $4.
Caleres has provided financial guidance for fiscal year 2024 that aligns with consensus EPS expectations but is slightly conservative regarding revenue projections. The forecast for the first quarter is below the consensus, with the company expecting a downturn in the footwear market throughout the year.
Despite the cautious revenue outlook, Loop Capital views Caleres' stock as undervalued, trading at 9 times the firm's 2024 EPS estimate and 7 times its enterprise value to EBITDA (EV/EBITDA) ratio. Based on these metrics, Caleres presents a 13% FCF yield according to Loop Capital's estimates for the fiscal year 2024.
The price target increase reflects confidence in Caleres' financial performance and the firm's belief in the stock's potential value to investors. The company's steady earnings and strong cash generation appear to underpin Loop Capital's optimistic stance on Caleres' financial prospects.
InvestingPro Insights
Caleres (NYSE:CAL) continues to be a topic of interest for investors, especially following the recent price target update from Loop Capital. To add further context to the company's financial health and investment potential, let's delve into some key metrics and insights provided by InvestingPro.
InvestingPro Data reveals a market capitalization of $1.41 billion USD, indicating a substantial presence in the footwear industry. The company's P/E ratio stands at a competitive 8.08, with an adjusted P/E ratio for the last twelve months as of Q3 2024 at 9.19. This valuation suggests that Caleres is trading at a reasonable price relative to its earnings, which may be attractive to value-oriented investors.
Moreover, Caleres has shown a strong return over the last year with a price total return of 80.55%, and the stock is trading near its 52-week high, at 99.92% of the peak price. This performance is complemented by a significant price uptick over the last six months, with a 50.13% return, reflecting investor confidence and market momentum.
InvestingPro Tips highlight Caleres' high shareholder yield and the fact that the stock price movements are quite volatile. These insights suggest that while the company has been rewarding shareholders, potential investors should be mindful of the stock's volatility. Additionally, Caleres has maintained dividend payments for 54 consecutive years, which is a testament to its financial stability and commitment to returning value to its shareholders.
For investors seeking more comprehensive analysis and additional InvestingPro Tips, there are 9 more tips available on InvestingPro, including forecasts on profitability and performance metrics. To explore these insights and make informed investment decisions, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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