Footwear retailers have enjoyed a successful year so far, with many reporting estimate-topping quarterly numbers. Genesco (NYSE: GCO) is one such retailer that posted better-than-expected numbers and raised its annual outlook late last month. Taking this into account, let's see whether the company deserves a place in your portfolio.

The steps that matter
Genesco's Journey shoe and Lids headwear stores have seen impressive sales in recent quarters. In the last 12 months, revenues have increased 21% to $1.98 billion, with operating income rising 39%. Genesco has managed to improve its operational efficiency as well, even as it has expanded its operations, with operating margins jumping to 5.8% from 5% a year ago.

In addition, some timely acquisitions have also helped Genesco boost overall sales. In June, the company spent $112.6 million to acquire U.K.-based shoe retailer Schuh. Schuh's 59 stores will give Genesco greater penetration in the U.K. and Irish markets. Genesco, meanwhile, also plans to open 83 new stores and shutter 76 underperformers. The new stores and the integration of Schuh into its business will give Genesco a boost to its growth prospects.

What's the price?
Let's take a look at how the company is valued when compared to its industry peers.

Company

Trailing P/E (LTM)

Forward P/E (NTM)

Genesco

19.2

14.0
DSW (NYSE: DSW)

11.7

15.1
Foot Locker (NYSE: FL)

13.8

11.8
Collective Brands (NYSE: PSS)

29.0

11.7
Dick's Sporting Goods (NYSE: DKS)

20.2

16.9

Source: Capital IQ, a division of Standard & Poor's; LTM = last 12 months; NTM = next 12 months.

The wide gulf between Genesco's high trailing P/E and low forward P/E indicates that a lot of growth is baked into the stock price. But considering the company has further room to grow, if it's able to continue executing, its forward P/E suggests the stock might actually be reasonably cheap.

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