Genesco (GCO), mcap=$624m, price $47.82 vs $50.00

$GCO pitch:
– Footwear retailer with a number of concepts including Journeys, Schuh, Johnston & Murphy.
– Mainly targets teens and kids – this drives recurring sales and store visits due to ever-changing feet size.
– Much healthier business compared to pre-COVID.
– Stock is cheap trading at 3.4x EBITDA.
– Reduced share count by 50% over the last 6 years with further buybacks likely due to zero leverage on the balance sheet.
– Possible monetization of RE assets and disposal of non-core brands could generate proceeds equivalent to half of the current market cap.

$GCO valuation:
– Trades at 3.6x consensus EBITDA for CY23.
– Valuing GCO in line with peers translates into a $63-79/share target.
– DCF model results in an $84/share target.

Exp. gain: +71% to $84/share

Full GCO write-up (free guest account required):

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