The Restructuring Story the Market's Ignoring, According to Financial Site Penny Stock Detectives

In his recent Penny Stock Detectives article, editor Sasha Cekerevac argues that the Brown Shoe Company, Inc. is a compelling turnaround story that investors are ignoring.

New York, NY (prHWY.com) June 1, 2012 - In his recent Penny Stock Detectives article, editor Sasha Cekerevac argues that the Brown Shoe Company, Inc. is a compelling turnaround story that investors are ignoring. Cekerevac believes that management is so confident in its strategy that it is maintaining its dividend yield as the turnaround plays itself out.

"Through both its retail stores and online web site, the company operates a steady business through which it can pay a good dividend yield of approximately 3.2%," notes Cekerevac. "In a world of low interest rates, a dividend yield over three percent appears quite attractive. The company has over 1,300 stores in the U.S., Canada, China, and Guam."

Considering last year was a difficult year for the world economy, Cekerevac says that Brown Shoe did a good job of weathering the storm. For the fourth quarter, the firm had sales of $628 million versus $604 million in the year prior. Excluding one-off items, the company had earnings of $4.1 million, compared to $5.0 million in the prior year. Again, considering the bad economic environment, the results aren't horrible. But there is room for improvement, believes Cekerevac.

This room for improvement is exactly what the firm is responding to, according to Cekerevac, although the market sentiment is still not behind the strategy. Brown Shoe is closing two distribution centers in the U.S. and one factory in China. By streamlining the business, management feels the company will be a better position to drive earnings and ultimately continue generating a solid dividend yield.

With a forward price-earnings (P/E) ratio of 7.61 and a price/earnings to growth (PEG) ratio of 0.67, and trading at less than book value, the stock is not expensive, believes Cekerevac.

He suggests waiting until a clearer picture is formed both technically and in regards to the business restructuring. Yes, the dividend yield is good, says Cekerevac, but it's not worth buying the stock if the market sentiment pushes it below the $8.00 area, as the stock could then re-test the $6.00 range. A dividend yield is good to receive, but not at the expense of negative market sentiment. Patience is a virtue, Cekerevac says we should wait and see what the latest earnings report will say about Brown Shoe's business.

Published every business day, Penny Stock Detectives researches and analyzes low-priced opportunities in the stock market and individual stock market sectors. Penny Stock Detectives reports on penny stocks, small-cap stocks, micro-cap stocks, high-profit potential plays mostly under $10 and the stock market in general.

To see the full article and to learn more about Penny Stock Detectives, visit www.pennystockdetectives.com.

The editors of Penny Stock Detectives believe low-priced stocks, when researched properly, present investors with great opportunities to accumulate wealth and to increase the value of their investment portfolios. You can learn more about Penny Stock Detectives at www.pennystockdetectives.com.

Sasha Cekerevac, BA, and Danny Esposito, B. Comm., lead editorial stock analysts at Penny Stock Detectives, in conjunction with stock market guru George Leong, B. Comm., have just updated their breakthrough video, If You Missed Apple, Shame on Us; If You Miss This... which highlights a company these stock analysts believe looks very similar to Apple Inc. in its early days. To see the video, visit: http://www.pennystockdetectives.com/video/pt/index.php?sb=PRESS.

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Tag Words: penny stocks, stock market, dividend yield

Categories: Finance

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