Shoe Carnival Inc Valuation – Initial Coverage $SCVL

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – December 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Shoe Carnival Inc (SCVL) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Shoe Carnival, Inc. is a family footwear retailer. The Company’s primary activity is the sale of footwear and related products through its retail stores in approximately 30 states within the continental United States and in Puerto Rico. The Company’s products assortment includes dress and casual shoes, sandals, boots and an assortment of athletic footwear for men, women and children. Its stores also carry accessories, such as socks, belts, shoe care items, handbags, jewelry, scarves and wallets. It classifies athletic shoes by functionality, such as running, basketball or fitness shoes. Its average store carries approximately 27,100 pairs of shoes in over four general categories: women’s, men’s, children’s and athletics. The Company operates approximately 400 stores in over 30 states and Puerto Rico, and offers online shopping at Its e-commerce site offers customers an opportunity to choose from a selection of products in all of the same categories of footwear.

SCVL Chart

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Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.


Downloadable PDF version of this valuation:

ModernGraham Valuation of SCVL – December 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?


Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $523,381,063 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 4.02 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 141.64% Pass
6. Moderate PEmg Ratio PEmg < 20 20.26 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.53 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 4.02 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $1.40
MG Growth Estimate 2.16%
MG Value $17.96
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $20.33
MG Value based on 0% Growth $11.92
Market Implied Growth Rate 5.88%
Current Price $28.41
% of Intrinsic Value 158.16%

Shoe Carnival, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, poor dividend history, and the high PEmg ratio. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.23 in 2013 to an estimated $1.4 for 2017. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.88% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Shoe Carnival, Inc. revealed the company was trading above its Graham Number of $24.27. The company pays a dividend of $0.27 per share, for a yield of 1% Its PEmg (price over earnings per share – ModernGraham) was 20.26, which was below the industry average of 50.09, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $12.26.

Shoe Carnival, Inc. receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $12.26
Graham Number $24.27
PEmg 20.26
Current Ratio 4.02
PB Ratio 1.53
Current Dividend $0.27
Dividend Yield 0.95%
Number of Consecutive Years of Dividend Growth 2


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Most Recent Balance Sheet Figures

Balance Sheet Information 10/1/2016
Total Current Assets $357,604,000
Total Current Liabilities $88,922,000
Long-Term Debt $0
Total Assets $469,669,000
Intangible Assets $0
Total Liabilities $141,645,000
Shares Outstanding (Diluted Average) 17,614,000

Earnings Per Share History

Next Fiscal Year Estimate $1.47
Jan2016 $1.45
Jan2015 $1.27
Jan2014 $1.32
Jan2013 $1.43
Jan2012 $1.31
Jan2011 $1.37
Jan2010 $0.80
Jan2009 $0.29
Jan2008 $0.65
Jan2007 $1.15
Jan2006 $0.93
Jan2005 $0.64
Jan2004 $0.61
Jan2003 $0.81
Jan2002 $0.67
Jan2001 $0.52
Jan2000 $0.59
Jan1999 $0.51
Jan1998 $0.37
Jan1997 $0.21

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.40
Jan2016 $1.36
Jan2015 $1.33
Jan2014 $1.32
Jan2013 $1.23
Jan2012 $1.04
Jan2011 $0.89
Jan2010 $0.69
Jan2009 $0.67
Jan2008 $0.84
Jan2007 $0.90
Jan2006 $0.76
Jan2005 $0.66
Jan2004 $0.66
Jan2003 $0.66
Jan2002 $0.57
Jan2001 $0.50

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The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.






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