Foolish Forecast: The Shoe Fits at Wolverine

Wolverine World Wide (NYSE: WWW  ) owns a number of well-known shoe brands such as Hush Puppies and Bates and licenses other brands from the likes of Harley-Davidson and Patagonia. Its stable of shoe names and no-nonsense approach to selling them to consumers has duly rewarded investors over time, and we'll learn how the past three months went when Wolverine releases second-quarter earnings tomorrow. Here's what to expect:  

What analysts say:

  • Buy, sell, or waffle? Eleven analysts follow Wolverine. Six are bullish, while the rest can't make up their minds and rate it a hold.
  • Revenue. Analysts are projecting second-quarter sales of $256.5 million, or 7.6% ahead of last year's number.
  • Earnings. Analysts project quarterly earnings of $0.28, for a year-over-year improvement of 12%.

What management says:
Back when Wolverine released impressive first-quarter results, it increased fiscal year earnings guidance to $1.57 to $1.63 per share and stuck with its expected sales range of $1.20 billion to $1.23 billion. Management has a long-term goal of "growing annual revenue in the mid- to upper-single digit range and delivering double-digit earnings-per-share growth."

What management does:
As fellow Fool Steven Mallas recently wrote, Wolverine has a steady track record of generating cash flow and paying dividends. It also met its long-term goals over the past five years with average annual sales growth of 9.4% and net income improvements of 13.6%. And recent net margins of more than 7% easily beat rivals such as Timberland (NYSE: TBL  ) , with 5.4%; Skechers (NYSE: SKX  ) , with 6.2%; and Stride Rite (NYSE: SRR  ) , with 4.7%.

Margins

12/05

3/06

6/06

9/06

12/06

3/07

Gross

38.2%

38.4%

38.2%

38.3%

38.7%

38.8%

Operating

11%

11.2%

11.2%

11.4%

11.4%

11.5%

Net

7%

7.2%

7.2%

7.2%

7.3%

7.4%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Wolverine has posted solid profitability, but has yet to match the 9.1% profit margin that industry leader Nike (NYSE: NKE  ) boasts. And even some smaller rivals, like K-Swiss (Nasdaq: KSWS  ) and Deckers Outdoor (Nasdaq: DECK  ) , outperform the company's impressive margins. But the stock could continue to reward investors, even with Wolverine at less than 18 times forward expectations, if the company can meet its long-term sales and earning goals.  

For more related Foolishness:

Want some new stock ideas? Learn more about what Motley Fool CAPS players -- now 60,000 strong -- think of the company you're interested in.

Fool contributor Ryan Fuhrmann is long shares of Nike but has no financial interest in any other company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.


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