Wolverine Upped to Strong Buy - Analyst Blog

On Jan 4, 2014, Zacks Investment Research upgraded Wolverine World Wide Inc. ( WWW ) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Wolverine has been witnessing rising earnings estimates over the last 90 days. The company's strong fundamentals and robust quarterly performances have been the driving factors. This apparel-footwear retailer, which competes with Nike, Inc. ( NKE ), has delivered positive earnings surprises in the trailing four quarters with an average beat of 74.7%. The long-term expected earnings growth rate for this stock is 12.5%.

Wolverine's operational efficiencies, its formidable 16-brand portfolio and leverage from the recent acquisitions (Collective Brands' Performance + Lifestyle Group) position it favorably to generate healthy sales. Moreover, exclusive assortments remain popular among consumers and impart the company a competitive edge.

Wolverine's third-quarter 2013 earnings per share of 58 cents (on post-split basis) handily surpassed the Zacks Consensus Estimate of 52.5 cents and rose 61.1% year over year. Wolverine reported net sales of $716.7 million that more than doubled on a year-over-year basis and came ahead of the Zacks Consensus Estimate.

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, against the earlier projection of $2.60-$2.75, which marks 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%.

The Zacks Consensus Estimate for 2013 increased marginally by 0.7% to $1.41 per share over the last 90 days. For 2014, the Zacks Consensus Estimate rose by 2.9% to $1.76 per share over the same time frame.

Given the company's upbeat guidance for 2013 and the signs of recovery in the economy, we expect Wolverine's robust performance to continue going forward.

Other Stocks to Consider

Other retail stocks with a favorable Zacks Rank include Deckers Outdoor Corp. ( DECK ) and Skechers USA Inc. ( SKX ). Both of these carry a Zacks Rank #2 (Buy).

DECKERS OUTDOOR (DECK): Free Stock Analysis Report

NIKE INC-B (NKE): Free Stock Analysis Report

SKECHERS USA-A (SKX): 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 Nasdaq, Inc.

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

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