Quick Take: Genesco Sticks It to the Man

Seems Genesco's (NYSE: GCO  ) management and I think alike. Word is out that the mall-based retailer told Foot Locker (NYSE: FL  ) , "No sale for you."

As I mentioned last week, merger mania is in the air, and there's plenty of private equity money out there looking for decent returns. That's reason enough for Genesco's management and shareholders to play hard to get.

But factor in reality -- Foot Locker is stagnating, in need of help, and Genesco isn't -- and, well, you have the reason for today's 15% uptick in Genesco. As I pointed out last week, Genesco is growing more quickly and sports better investment returns.

If I assume improvements in operations at Genesco, extrapolate cash flow growth, and then plug a few numbers into my "model" (fancy Wall Street slang for "make up some stuff and run it through a spreadsheet"), I can actually see Genesco making itself worth close to $55 a share on its own. Assume Foot Locker would be the beneficiary of more cost cutting and "synergies" (yuck -- I'm sorry) and why shouldn't Genesco shareholders demand a 20% premium to that $55 intrinsic value estimate?

I say keep sticking it to 'em, Genesco holders. If Foot Locker really wants to take away your opportunities for the future, make 'em pay $66 a share.

Comments? Bring them here.

At the time of publication, Seth Jayson had no positions in any company mentioned here, and he hates seeing his stocks snapped up for less than their potential worth. See his latest blog commentary here. View his stock holdings and Fool profile here. Fool rules are here.