Wolverine Looks Promising - Analyst Blog

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Apparel-footwear retailer Wolverine World Wide Inc. ( WWW ) has posted better-than-expected bottom-line results in the past four quarters, thereby securing itself in a comparatively favorable position. With the company providing an upbeat guidance for 2013 and the economy showing signs of recovery, we expect Wolverine's robust performance to continue going forward.

The company kept its earnings streak alive by beating the Zacks Consensus Estimate in the trailing four quarters. The company posted a positive earnings surprise of 11.5% in the third quarter, 35.3% in the second quarter and 51.9% in the first quarter of 2013. Moreover, in the fourth quarter of 2012, the positive earnings surprise was 200.0%.

Additionally, Wolverine's global net sales grew over two times in the third quarter, rose 88% in the second quarter and twofold in the first quarter of 2013. Furthermore, sales had increased 60.5% in the fourth quarter of 2012. Top-line expansion benefited primarily from the acquisition of Collective Brands' Performance + Lifestyle Group (PLG) group.

Buoyed by stronger-than-anticipated quarterly third-quarter 2013 results, management raised its earnings guidance. Adjusted earnings per share are now likely to be in the range of $2.73-$2.83, up from the earlier projection of $2.60-$2.75, thereby marking year-over-year growth of 19.2% to 23.6%.

Revenues are expected to be in the band of $2.71-$2.73 billion, up 6.4% to 7.1% year over year on a pro-forma basis. For fourth-quarter 2013, the company anticipates revenues to be $750-$780 million, reflecting growth of 3.2% to 6%.

Going forward, we believe Wolverine's operational efficiencies, its formidable 16-brand portfolio and leverage from the recent acquisitions well positioned it to generate healthy sales. Moreover, exclusive assortments remain popular among consumers and impart it a competitive edge.

Barring a few hiccups, the share price has been surging and most recently it hit a new 52-week high of $34.10 on Dec 31, before closing at $33.96. Moreover, this Zacks Rank #2 (Buy) stock amassed a return of roughly 68.2% over a year.

Based on the current price, this retailer is 20.2% above the Zacks Consensus average analyst price target of $28.25. The company currently trades at a forward P/E of 24.1x, a premium of 26.4% to the peer group average of 19.06x. Additionally, the company's long-term estimated earnings per share (EPS) growth rate is 12.5%.

Apart from Wolverine, other stocks such as Cummins Inc. ( CMI ), Foot Locker, Inc. ( FL ) and Gannett Co., Inc. ( GCI ) achieved new 52-week highs of $141.39, $41.63 and $29.87, respectively on Tuesday.



CUMMINS INC (CMI): Free Stock Analysis Report

FOOT LOCKER INC (FL): Free Stock Analysis Report

GANNETT INC (GCI): Free Stock Analysis Report

WOLVERINE WORLD (WWW): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: CMI , EPS , FL , GCI , PLG

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