Zacks anatomy of success: Brown Shoe

The company has distinguished itself as a stock poised to outperform.

By Zacks.com Aug 15, 2013 5:00PM

By Kevin Matras

 

Stocks with a Zacks Rank #1 (Strong Buy) have a high probability of outperforming the market over the next one to three months. In fact, since 1986, a portfolio of Zacks Rank 1's has shown an average annual return of 26% per year, which is nearly triple that of the S&P 500.


Here's an example that perfectly illustrates how to trade a Zacks Rank #1 stock, and how to ride the wave of earnings estimate revisions for market beating gains.


Brown Shoe Co. (BWS)

Brown Shoe Company is a small-cap value stock in the shoes & related apparel industry that markets footwear in the United States, Canada and China through their retail stores  -- including Famous Footwear, Naturalizer and Dr. Scholls, to name a few.


Late last month, BWS received a Zacks Rank #1, distinguishing itself as a stock poised to outperform. Between June 29th of last year, when it was trading at $12.91, and September 21, 2012, when it closed at $16.11, BWS rewarded investors with a 24.79% gain in less than 3 short months compared to the market's 7.19%.


During that time, their 12 Month Forward Earnings Estimates continuously climbed higher from $1.02 to $1.11, producing a spectacular 433% positive EPS surprise and marking a path for higher prices to follow. In fact, during that entire time, earnings estimates didn't go down once, making for a worry-free return.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rising earnings estimates and rising prices go hand in hand. Simply put, when earnings estimates are going up, the stock should go up as well.

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