Over the past year, shares of Steve Madden (NASDAQ:SHOO) have marched steadily up from about $10 to $37.17. The near four-bagger performance can be attributed to a continued relief rally that started in 2005, after founder Steve Madden returned to the company following a disastrous 2004. Following a peak in May, the shares recently returned to Earth, trading near $25 last Tuesday. Analysts quickly noticed the dip, but was the pullback really enough to warrant investment consideration?

One analyst upgraded the stock, and another initiated coverage on Thursday; as a result, the stock jumped back up to a recent $29.10. Analysts like Madden's mix of footwear for low- to high-end consumer price points, a diversity that also leads to wider appeal for its wholesale business with department stores and other retailers. In addition, nearly 32% of its revenues come from its own growing base of 98 retail stores. In terms of demographics, women dominate the company's market; Madden Men's sales make up only about 15% of total sales.

Steve Madden may be a good alternative to pure-shoe retailers such as PaylessShoeSource (NYSE:PSS) or BakersFootwear (NASDAQ:BKRS), thanks to its more diversified sales platform as both a supplier and retailer. (The similar Brown Shoe (NYSE:BWS) has a stock chart much like Madden's.) However, Madden's free cash flow generation has been erratic over the past couple of years; it was barely existent in 2003, minimal in 2004, and largely driven in 2005 by a tax benefit caused by stock options and a reduction in a provision for doubtful accounts.

At about 15 times next year's projected earnings, the quick run-up in the shares appears to have lifted Madden to "fully valued" status, given its mixed growth track record. Top-line growth should continue, as management opens new stores and focuses on a younger female demographic. But at the current valuation, I'd demand more consistent earnings and cash flow generation. This is hardly impossible, but the company operates in the fickle footwear fashion industry, adding an ever-present element of unpredictability.

Like Cinderella and her glass slipper, we've got a Foolish newsletter that's the right fit for you. Try each on for size with a free 30-day guest pass.

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