Wolverine World Wide, Inc.’s WWW shares are currently trading 14.6% below the 52-week high of $18.51 attained on Oct. 4, 2024, making investors contemplate their next moves. Over the past six months, WWW stock has gained 47.3% against the Zacks Shoes and Retail Apparel industry’s 6.3% decline. As the market fluctuates and the holiday season approaches, the question is whether you should buy, hold or sell WWW stock.
The company’s enhanced operational efficiency and product initiatives have also helped it to outperform broader the Zacks Consumer Discretionary sector and the S&P 500 index’s growth of 7.2% and 13.2%, respectively, during the same period.
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Wolverine, a leading designer and distributor of apparel and footwear, closed Friday’s trading session at $15.81. The stock is trading above both its 200-day and 50-day simple moving averages (SMA) of $12.20 and $15.18, respectively, highlighting a continued uptrend. SMA is a key indicator of price stability and long-term bullish trends. This technical strength, along with sustained momentum, reflects positive market sentiment and investor confidence in Wolverine's financial health and growth prospects.
Wolverine has made significant investments in demand generation, particularly in marketing and advertising, which have greatly enhanced brand visibility, customer loyalty and sales growth. By focusing on innovative, trend-driven products, the company has successfully resonated with consumers, thus showcasing its commitment to staying relevant in the marketplace.
Saucony, one of Wolverine's flagship brands, highlights the success of this approach with product launches like the Triumph 22 and Hurricane 24, both of which have attracted strong consumer interest. In the second quarter of 2024, Saucony's revenue contribution increased 900 basis points year over year, with e-commerce sales growing more than 20%. Other brands, such as Merrell and Sweaty Betty, have also strengthened their market positions through product enhancements and targeted consumer engagement.
WWW's Strategic Debt Reduction and Margin Gains
Wolverine has made notable progress in reducing its debt, leading to a healthier balance sheet. By the end of the second quarter, the company's net debt was $666 million, reflecting a $270 million decrease from the previous year. This proactive approach to debt reduction enhances financial flexibility and supports investments in growth initiatives.
In the second quarter, Wolverine achieved a 400-basis-point increase in the adjusted gross margin to 43.1%. This improvement underscores the company’s strong profitability, driven by effective cost management, efficient inventory control and targeted pricing strategies, thereby reinforcing its trajectory toward long-term financial stability.
What to Expect From Wolverine in 2024
Wolverine is poised for substantial growth in 2024, capitalizing on its strong market presence to enhance profitability. The company anticipates a significant increase in its gross margin, projecting an adjusted figure of 44.5% at the midpoint, which represents a year-over-year rise of 460 basis points.
Adjusted selling and general administrative expenses are expected to decrease to $640 million, or 37.5% of sales, down from $716 million reported in 2023. Additionally, the adjusted operating margin is projected to improve to 7.4%, indicating a 350-basis-point increase from the previous year.
Adjusted earnings per share are anticipated to be between 75 cents and 85 cents, an increase from the previously mentioned range of 65-85 cents, despite a projected 10-cent negative impact from foreign exchange fluctuations. Wolverine reported adjusted earnings of 5 cents per share in 2023.
For the third quarter, Wolverine predicts a gross margin of 45%, reflecting a 300-basis-point year-over-year increase. The company also expects an adjusted operating margin of 7% and adjusted earnings per share of 20 cents.
Is WWW a Value Play Stock?
From a valuation perspective, Wolverine’s shares present an attractive opportunity, trading at a discount relative to industry benchmarks. With a forward 12-month price-to-earnings ratio of 13.11, which is below the industry’s average of 25.79, the stock offers compelling value for investors seeking exposure to the sector. It currently has a Value Score of A, further validating its appeal.
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Final Thoughts on Wolverine Stock
Investors may consider Wolverine stock due to the company’s strong operational efficiency and innovative product initiatives that have enhanced brand visibility and customer loyalty. With significant investments in marketing and a focus on trend-driven products, Wolverine has successfully resonated with consumers, driving sales growth across its key brands. Its proactive debt reduction strategy has improved its financial flexibility, while recent gains in profitability reflect effective cost management. Furthermore, the stock's strong technical indicators signal a positive market sentiment, positioning Wolverine for continued growth as it capitalizes on its strong market presence. The company currently carries a Zacks Rank #2 (Buy).
Other Stocks to Consider
Some other top-ranked stocks are Abercrombie & Fitch Co. ANF, Gildan Activewear Inc. GIL and Crocs, Inc. CROX.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It sports a Zacks Rank #1 (Strong Buy) at present. ANF delivered a 16.8% earnings surprise in the last reported quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Abercrombie’s fiscal 2025 earnings and sales indicates growth of 63.4% and 13%, respectively, from the fiscal 2024 reported levels. ANF has a trailing four-quarter average earnings surprise of 28%.
Gildan Activewear Inc. is a manufacturer and marketer of premium quality branded basic activewear. It carries a Zacks Rank of 2 at present.
The consensus estimate for Gildan Activewear’s 2024 earnings and sales indicates growth of 14% and 1.4%, respectively, from 2023’s reported levels. GIL has a trailing four-quarter average earnings surprise of 5.5%.
Crocs offers a wide variety of footwear products, including sandals, wedges, flips and slides, that cater to people of all ages. The company currently carries a Zacks Rank of 2.
The Zacks Consensus Estimate for Crocs’ 2024 earnings and sales indicates growth of 7.3% and 4.4%, respectively, from the 2023 actuals. CROX has a trailing four-quarter average earnings surprise of 14.9%.
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