Shares of Stride Rite
While Stride Rite posted its 4.2% increase, Nike
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.