For the past year, the stock performance for shoe makers Timberland (NYSE:TBL), Kenneth Cole Productions (NYSE:KCP), and Wolverine World Wide (NYSE:WWW) has been pretty dreary. Motley Fool Hidden Gems selection Columbia Sportswear (NASDAQ:COLM) also sells a fair amount of footwear, and it's suffered a similar fate over the last year. However, the companies' results haven't turned out so badly.

Today, Wolverine World Wide reported solid (but not spectacular) fiscal 2005 results. The company's shares are down 4% in mid-Wednesday trading -- which makes this well-run company's valuation increasingly enticing.

For the year, the company's sales were up 7% to $1.06 billion, and earnings per share were up to $1.27 per diluted share, a 16.5% improvement over last year. However, the fourth-quarter numbers were a bit weaker, with year-over-year sales and earnings up only 4.4% and 5.9%, respectively.

The company continued to improve both its gross margin and its earnings before interest and tax (EBIT) margin. For the year, gross margins were 38.2%, compared to last year's 37.7%; the EBIT margin improved to 10.7% from the previous year's 10.1% showing. Wolverine Worldwide's margins have been rising for several years now; in 2002, the company's gross margin was only 35.6%, and its EBIT margin was only 9.3%.

The valuation is the real story here, though. The company didn't provide a cash flow statement with its earnings release, but based on its past cash flow data, I think the company's shares are approaching "buy" territory. Wolverine trades at a P/E of 17.9, but its free cash flow generation is historically higher than its net income. On a trailing-12-month basis, the company has generated $1.37 per share in free cash flow, and it trades at a price-to-free cash flow multiple of 16.5. Furthermore, over the previous three years, the company has averaged slightly higher free cash flow. Free cash flow average $1.41 per share over the past three years, with a price-to-free cash flow multiple of 16. That's not bargain-basement territory, but it might be worth watching.

For more Foolish footwear:

Columbia Sportswear is a Motley Fool Hidden Gems recommendation. For more small-cap companies with solid fundamentals and huge growth potential, sign up today for a free 30-day trial.

Nathan Parmelee owns shares in Kenneth Cole Productions but has no financial stake in any of the other companies mentioned. The Motley Fool has an ironclad disclosure policy.