Is Shoe Carnival Is A Comfortable Fit For Your Portfolio? Shoe Carnival (NASDAQ: SCVL) is one of those underappreciated pandemic winners that just keeps on delivering. The company's efforts in eCommerce and safe store operations have driven the company to great success and have it on track for YOY growth in 2021 and beyond.

Shoe Carnival Is No House Of Horrors For Investors

Shoe Carnival (NASDAQ: SCVL) is one of those underappreciated pandemic winners that just keeps on delivering. The company's efforts in eCommerce and safe store operations have driven the company to great success and have it on track for YOY growth in 2021 and beyond. While the company did not offer any formal guidance the outlook for the year is more than favorable and we think CEO Cliff Sifford is being very cautious. There is a massive economic reopening happening or on the verge of happening and that means massive hiring. Massive hiring means lots of people will be looking for new shoes to start their new jobs and those that don't will join the stampede soon after the first paychecks start showing up.

"As we enter 2021, we remain financially strong and will leverage the invaluable knowledge we have gained to navigate through a changing dynamic. To date, our fiscal first quarter 2021 results are shaping up to show continued momentum and are on track for record first-quarter sales and earnings … In addition, we will continue to enhance our e-commerce capabilities, delivering growth well ahead of our previous expectations. With so much great work being done, I am looking forward to another strong year for the Shoe Carnival team."

Shoe Carnival Results Meet Expectations

Shoe Carnival's Q4 results are great but not spectacular in that they only barely beat the consensus. The oddity is that share prices are holding up in pre-market action despite the miss, possibly because of the guidance that wasn't guidance. Regardless, the $253.9 million in quarterly revenue is down slightly from the previous quarter but growth accelerated to 5.8% from -1.0% to beat consensus estimates by 70 basis points.

The gain in revenue was driven by growing strength in the brick & mortar locations that were supercharged by eCommerce. eCommerce sales grew by triple digits for the fourth quarter in a row to drive a 175% gain in F2020 and we expect those gains to stick. On a comp basis, comparable-store sales grew 6.4% to beat the consensus as well and accelerate from last year's 3.2% gain.

Another acceleration occurred in the margins. The company's gross margin improved by 170 basis points on the combined effect of higher product margins and lower SG&A as a percent of sales. Looking forward, higher product margins should stick but may come under pressure from rising freight costs while the leverage of increasing revenue versus fixed expenses should only get better as revenue grows. Moving down to the bottom line, the company's net income increased 114% YOY delivering GAAP EPS of $0.52, $0.02 better than expected.

The Shoe Carnival Dividend Is Safely Growing

Shoe Carnival doesn't have decades of distribution increases in its history but it has been steadily increasing the payout since it was first declared way back in 2021. The last increase or we should say the latest, was declared along with the earnings report and is worth about 36% to those already holding the stock. For those that aren't, it brings the yield up to about 1.0% with a 50% payout ratio versus the 2021 consensus estimate which we think is too low. Based on our estimates the company is looking at 75% to 100% revenue growth in the Q1 period with more difficult but still positive comps for the rest of the year. That should drive a low to mid-double-digit increase in earnings and bring the payout ratio below 40% at the highest.

The Technical Outlook: Shoe Carnival Is In An Uptrend

Shares of Shoe Carnival pulled back from recent highs but are still in an uptrend. The Q4 results and outlook have the share prices up slightly in early premarket action and showing support above the 30-day EMA. So long as price action holds up at the EMA we expect to see this stock continue upward if following a brief consolidation. Resistance is present at the $55.25 level but we don't think it will last very long, especially if the analysts start paying attention to this stock again. They should.