Bear of the Day: Wolverine World Wide (WWW)

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Wolverine World Wide (NYSE:) is a Zacks Rank #5 (Strong Sell) designs, manufactures, sources, markets, licenses, and distributes footwear, apparel, and accessories. The company offers casual footwear and apparel; performance outdoor and athletic footwear and apparel; kids’ footwear; industrial work boots and apparel; and uniform shoes and boots.

The stock was having a good year, but pulled back over the summer and is now unchanged for 2021 after a disappointing earnings report.

Despite the dip, investors should shy away from the stock until earnings get back on track and the stock can get above resistance levels.

About the Company

Wolverine is headquartered in Rockford, MI and employs 3,400 people. The company was founded in 1883 and sells its products to department stores, national chains, catalog and specialty retailers, independent retailers, uniform outlets, and mass merchant and government customers through retail stores, as well as through third-party licensees and distributors.

WWW is valued at $2.7 billion and has a Forward PE of 15. The company holds a Zacks Style Score of “D” in Value, but “A” in Growth.

Q3 Earnings

Wolverine reported earnings in mid-November, seeing a 1.6% EPS beat. The company never misses, but this was its worse quarter since the Q1 of 2020. In comparison to the triple digit EPS beats of a year ago, investors were disappointed.

Additionally, the company cut its FY21 outlook to $2.05-2.10 v the $2.29 expected.

The stock fell over 10% on the report and has continued to drift lower as estimates are falling.

Estimates

For the current quarter, estimates have dropped 33% over the last 30 days, falling from $0.62 to $0.41. For the current year, we see a 9% drop over that same time frame.

The main reason the company is struggling short term is supply chain issues. While demand remains strong, closures in Vietnam hurt the quarter.

Until the supply chain issues improve, investors might just want to sit on the sidelines and wait for the technical aspects to improve.

Technical Take

WWW is down over 25% from its 2021 highs and back near the unchanged mark for 2021. The stock remains in a sideways trading range since the summer months and is below all moving averages.

Investors can sit on their hands until the 200-day is taken back by the bulls. This level currently resides at $35.50, about 10% higher from current price.

In Summary

Wolverine is a solid company that makes a quality footwear product. It is an historic brand that has recently acquired Sweaty Betty to help it grow. While the company works through the acquisition and the supply chain issues, investors should look elsewhere.

If a footwear play is desired, Caleres (NYSE:) (CAL) might be a good bet. The stock is a Zacks Rank #1 (Strong Buy) that recently beat on EPS by 38%.

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