Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of footwear chain Shoe Carnival (NASDAQ:SCVL) were getting scuffed up today, falling as much as 15% on a mixed earnings report.
So what: It wasn't all bad for Shoe Carnival. The retailer actually beat EPS by $0.02 with a $0.60 profit on top-line growth of 13.4% and a same-store-sales increase of 6.2%. However, the fourth-quarter guidance was below expectations. Management projected comps would grow by just 2% to 4% with an EPS of $0.19 to $0.23, while analysts had projected $0.27 a share. The company didn't offer an explanation for the lowered guidance but did tout its Black Friday sales.
Now what: This could just be a conservative estimate from Shoe Carnival, in which case the market is overreacting. Investors have a tendency to punish companies for delivering underwhelming guidance after an earnings beat. Regardless, the shoe chain's Q4 outlook still represents a 30% gain in EPS from a year ago, so the drop seems mostly seasonal. Sales should continue increase at a solid clip as the store base expands and same-store-sales move higher. Today's drop looks like it could be a good buying opportunity.
Don't let this company leave you in the dust. Add Shoe Carnival to My Watchlist.
Jeremy Bowman and The Motley Fool have no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.