By: Tracey Ryniec

Genesco Inc. (GCO), a specialty shoe and hat retailer, is in the sweet spot for retailing. This Zacks #1 Rank (strong buy) is expected to see double digit earnings growth this year. Shares recently soared to a new multi-year high. But surprisingly, GCO is also a value stock, with a forward P/E of 14.7.

Being involved in retail since 1924, Genesco has seen its share of both good and bad economies. Headquartered in Nashville, it now operates 2,225 footwear and headwear retail stores in the U.S., Canada and Puerto Rico.

Its brands include Journeys, Journeys Kidz, Hat Zone, Cap Connection and Head Quarters. It also designs footwear for its own Johnston & Murphy brand and for the licensed Dockers brand.

Genesco beats for the fifth straight quarter

On Nov 22, Genesco reported its fiscal third quarter 2012 results, topping once again the Zack Consensus. Earnings per share were $1.21 compared to the consensus of 96 cents. It made just 77 cents in the year ago quarter.

Comparable store sales soared 12%. All of its major brands were strong in the quarter. The Journeys Group rose 15%. Underground Station gained 14%. The Lids Sports Group jumped 8% and Johnston & Murphy Retail rose 7%.

Net sales rose 33% to $616.5 million from $464.8 million in the prior year but this included the acquisition of British footwear company Schuh Group.

Full year guidance raised

Genesco said on Nov 22 that November comparable-store sales were up 11% through the first three weeks of the month, which is the start of the fiscal fourth quarter. The retailer doesn't expect to maintain that level for the balance of the quarter but it was optimistic it would mean a strong finish to fiscal 2012.

Coupled with the third quarter beat, the company decided to raise its fiscal 2012 guidance to the range of $3.64 to $3.69 from the prior guidance of $3.35 to $3.42.

Zacks consensus estimates jump

The analysts liked what they heard on Nov 22 as 8 estimates out of 8 were raised in the last week for fiscal 2012. The 2012 Zacks Consensus Estimate jumped to $3.71 from $3.41 in that time, which is higher than the company's guidance range.

That is also huge earnings growth of 50% compared to fiscal 2011.

Fiscal 2013 isn't looking too shabby either. The Zacks Consensus rose to $4.28 from $4.07 since the earnings report as 8 out of 9 estimates were revised higher.

That is further earnings growth of 15.3%.

Shares are soaring

While shares had some weakness over the summer as the overall stock market tumbled, they recently returned to new multi-year highs.

Yet shares still have value

In addition to a P/E just under 15, which is my cut-off for value, Genesco also has a price-to-book ratio of only 1.9. A P/B under 3.0 usually indicates "value."

It also has an attractive price-to-sales ratio of 0.6. A P/S ratio under 1.0 can mean a company is undervalued.

The company also has other attractive fundamentals such as a solid 1-year return on equity (ROE) of 12.6%.

If you're looking for a retailer that has strong growth as well as attractive valuations, look no further than Genesco.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services.

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