CAL – Strong financials, technical potential upside.

/Not a recommendation for trade and investment/

Buy about 20$

Footwear company Caleres ( CAL ) reported results for the fourth quarter of fiscal 2022, revealing records for both sales and earnings. Earnings per share rose 5.4% from the its high value for the previous year.

The dividend remained steady. Future guidance for fiscal 2023 was set at an average of $4.20 per share. This is only slightly less than last year’s result despite the general view that 2023 will likely be less stable because of the turmoil in the American economy.

Management opined that Caleres is now in a position to earn at least $4 per share, as a low point.

Here are the real results from the end of fiscal 2014. Sales grew decently. Cash flow per share more than doubled. Earnings per share rose nearly 163%.

When the report was published, the price was 13.4% below the level it had been exactly nine years earlier. Including dividends and total shareholder return it was just 2.1%.

This is bad news for long-term holders, but great news for those looking for a good buy deal. 

In the pre-Covid period from 2014 to 2019, the stock’s average multiple was 14 times EPS, accompanied by a yield of about 1%. Each of those six years offered starting points ranging from a low of $32, 26 (in 2019) to a high of $41.09 (in 2018).

Sell moments (marked with a red star below) saw CAL fetch 15.4x to 18.6x earnings. The best buying opportunities before COVID (with a green star) showed traders , which paid from 10.3 times to 13.0 times earnings, great chances to come out on good profit percentages.

The long-term average P/E . These were formed from actual trading forecasts that take into account changing sales, earnings and other business metrics.

Assume guidance is right on fiscal 2023 earnings per share. Apply a multiple of 10 and it’s now worth about $42. If CAL returns to 12 times forecast EPS, it could be north of $50 . At its historical average of 14, multiples could shoot the price to almost $59.

Last month, Caleres was trading at just 4.8 times trailing and about 5.2 times forward earnings. The only time CAL was cheaper than now was in March 2022, when the stock fell by short to $17.82. Just months later CAL was trading north of $31.

Technical analysis
Double bottom
Close to an ascending diagonal
A 13 of a sequential is likely to form around price 20.
The DeMarker Oscillator is coming out of oversold with a reversal signal.
Bullish engulfing candle
On Balance Volume did not stop falling, although the price was falling before that time – bullish divergence.