Caleres Inc. (CAL) shares fell 8.92% to $28.99 in after-hours trading after fourth-quarter earnings missed estimates and guidance fell well below analysts’ consensus. Shareholders were disappointed with the company’s earnings release after adjusted earnings per share came in 7 cents lower than expectations at $0.33 and revenue came in at $639.5 million, a beat from the $632 estimate. The company also initially guided 2017 EPS between $2.10 and $2.20, well below Wall Street’s consensus of $2.39.
CFO Hannah noted, “For the fourth quarter, we delivered solid adjusted EPS improvement of 26.9% over last year, despite a highly promotional and challenging retail environment. Throughout 2016, we continued investing in our business, delivered strong cash from operations of $183.6 million, and maintained the strength and flexibility of our balance sheet, even as we acquired Allen Edmonds. ”
Price action on the CAL daily chart shows the initial selloff tentatively found support from the $28.23 level. If the bearish slide continues, we could see price target $26.50 region, it is around that area that price could form a bullish Gartley pattern. Point D is targeted with the 78.6% Fibonacci retracement level of the X to A leg and the 161.8% Fibonacci expansion level of the B to C move. If valid, we could see a rebound target the psychological $30.00 handle. If the pattern is invalidated, further pressure could target the $24 area.
The Trade: Buy CAL at $26.50, with a stop loss at $25.50 and a take profit at $29.50. The Risk/Reward Ratio is 1:3