Insiders Sell Genesco, But It’s Not A Problem
Insiders have been selling shares of Genesco (NYSE: GCO) but it’s not a problem for the market. Not only are the sales small but they are spread among several insiders primarily directors. In addition, most of the sales were earlier in the year and offset by a single purchase. Company CFO Thomas George bought 1,800 shares during the 3rd quarter establishing himself as someone with skin in the game. Regardless, Insidertrades.com reveals insiders own about 4.8% of the stock and, more importantly, the institutions have been buying.
Institutions have been net buyers all year with activity pushing ownership up to over 92.0%. This is, in our view, a tremendous vote of confidence and a factor we see driving shares higher over the course of the next year.
Genesco Has What It Takes To Succeed
Genesco has the two things it takes for a retailer to succeed in today’s world; branding and eCommerce. The company is a teen retailer focused on fashion shoes and apparel across a wide range of styles. This positioning made it a go-to name for the back-to-school season and this year was a strong one indeed. The $600.54 million in consolidated revenue is not only up 25% over last year but it is up 12% versus 2019 and beat the consensus estimate by over 425 basis points. Strength was driven by demand in all categories with particular strength in eCommerce. eCommerce sales are up 79% from 2019 and are expected to be a foundational portion of revenue for the duration.
Moving down, the company produced a surprising 210 basis point improvement in gross margin and a decrease in SG&A expenses that left earnings well above the consensus. The GAAP earnings of $2.26 beat by $0.91 while the $2.36 in adjusted EPS beat by $1.07 and both are up 69% from last year. The results were so good in fact, the company was able to reinstate guidance and in a range well above expectations. Genesco is expecting consolidated revenue growth in the range of 9% to 10% for the year and for EPS in the range of $6.40 to $6.90 versus the $5.82 Marketbeat.com consensus estimate. The assumes Q4 EPS of $2.45 compared to the current consensus of $2.65.
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Genesco Returns Cash To Shareholders
Genesco started the pandemic with a strong balance sheet and has been able to improve it over the course of the last year. Not only is cash and securities up but debt is down and FCF is growing. This allowed the company to repurchase $31 million of its shares over the past quarter and we see share repurchases continuing in the present and future quarters. $31 million is worth about 3% of the market cap with shares trading near $66.50.
The Technical Outlook: Genesco Trends Higher
Price action in Genesco shares has been a little mixed since the release of Q3 earnings but is, ultimately, bullish. The stock is in an uptrend and edging higher within a near-term range. Price action is supported by the short-term 30-day EMA as well with additional indications of support within the indicators. The first target for resistance is near the current all-time high of $73.72 but, once that is broken, the door is open for a retest of the previous all-time high set way back in 2014.
Companies in This Article:
| Company | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
|---|
| Genesco (GCO) | $26.16 | -1.5% | N/A | -19.82 | Hold | $31.00 |
Experience
Thomas Hughes has been a contributing writer for InsiderTrades.com since 2019.
Areas of Expertise
Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies
Education
Associate of Arts in Culinary Technology
Past Experience
Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights.
