Shares of Stride Rite (NYSE:SRR) stepped up by more than 5% in response to its third-quarter results, which showed, among other things, revenues for the period growing by 4.2% year over year to $140.4 million. Does that mean that this maker of athletic and casual footwear is ready to run? Let's see how the numbers stack up against those of the competitors.
While Stride Rite posted its 4.2% increase, Nike (NYSE:NKE) reported revenue growth of 8% for its latest quarter over the same period last year. Meanwhile, Wolverine World Wide (NYSE:WWW), which includes the Merrell brand, saw revenues for its latest quarter climb by 8.5%, while Deckers Outdoor (NASDAQ:DECK) had flat sales. These numbers put Stride Rite's revenue growth near the bottom of the pack.
The company's shareholders should also keep a watch on the company's inventories, which grew by 6.9% year over year, compared with an increase in net sales of only 4.2%. To be investment-worthy, the company should either be able to increase sales or bring down its inventory to be more aligned with top-line growth.
Stride Rite's gross margins improved by 3.3 percentage points to 39.8% compared with the same period a year ago. But again, its competitors are doing the job better -- Nike's and Deckers' margins for the most recent quarter were at 45.3% and 39.59%, respectively.
Because of Stride Rite's sales growth, improvements to margins, and a slight reduction in outstanding shares, its earnings increased nicely by 24% year over year to $0.21 per share. Its stock is now trading at 17.2 times its trailing-12-month earnings per share of $0.74. Considering its current blended growth rate of around 14%, the company seems to be fairly valued.
In the near future, existing shareholders will want to look out for the Saucony acquisition and Stride Rite's ability to make a quick integration into existing infrastructure. In the meantime, despite the fair value, there is just not enough here to entice this Fool to buy.
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Deckers Outdoor is a Motley Fool Hidden Gems recommendation.
Fool contributor Jeremy MacNealy does not own shares of any companies mentioned.
