On Wednesday, UBS reaffirmed its Neutral rating on Designer Brands Inc (NYSE:DBI), with a consistent price target of $11.00.
The firm's assessment centers on the pressures faced by the company's core customer base, which is believed to be factored into the current fiscal year 2024 (FY24) projections and first quarter-to-date (1QTD) commentary. UBS anticipates that Designer Brands will not modify its earnings per share (EPS) guidance for FY24, which is estimated to be between $0.70 and $0.80.
The current consensus among analysts for the company's FY24 EPS stands at $0.76, and UBS expects it to remain near this level. The firm suggests that Designer Brands' guidance, coupled with positive commentary for the second quarter to date (2QTD), could slightly improve investor sentiment, which has been low.
The options market is predicting a significant price movement for Designer Brands' stock around the upcoming earnings announcement, with an expected change of plus or minus 12.4%. This is a contrast to the historical average movement of plus or minus 10.3% surrounding such events. Despite this, UBS forecasts that the actual stock volatility will be less than the 12.4% anticipated by the options market.
Designer Brands' financial outlook and market expectations provide a framework for investors as they monitor the company's performance. The UBS analysis suggests a cautious view on the stock, with no immediate changes to the company's financial guidance or analyst consensus.
InvestingPro Insights
As investors consider UBS's neutral stance on Designer Brands Inc (NYSE:DBI), it's worth noting the company's recent financial health and market activity through the lens of InvestingPro. With a market capitalization of $551.06 million and a P/E ratio that stands at 20.13, Designer Brands displays a valuation that some might find appealing, especially considering its adjusted P/E ratio for the last twelve months as of Q4 2024, which is slightly lower at 16.76.
One of the InvestingPro Tips highlights that management at Designer Brands has been actively repurchasing shares, a move that often signals confidence in the company's future prospects. Furthermore, the company is expected to remain profitable this year, with profitability also reflected over the last twelve months. These factors may contribute to a more robust free cash flow yield, as suggested by another InvestingPro Tip. With these considerations, coupled with a dividend yield of 2.1%, investors may find a compelling case for value in Designer Brands' current stock performance.
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