Sunday 22 September 2013

Analysis of Wolverine

An American sports, outdoor and work shoe producer

Company: Wolverine World Wide

Business: An American sports, outdoor, work and regular shoe producer. They have several brands in their portfolio that they either fully own or license. To mention a few of the brands: Bates, Cat footwear, Merrell, Saucony and of course Wolverine. For the full list of brands please look here.

Active: They are active globally and their products are sold in 200 countries. Many of the brands I have seen in the stores but I have never bought one of them The last running shoes that I bought for myself was a pair of Asics.

P/E: 34.8

contrarian values of P/E, P/B, ROE as well as dividend

The P/E of Wolverine is too high with 34.8 and the P/B is in my opinion even worse with 4.4. This gives a very clear no go according to Graham. The earnings to sales is up at 5% which does not seem to be too bad compared to other sport shoe producers and it is pretty much in line with them. The ROE is up at 12.5 which is acceptable. The book to debt is bad for an American company sine it is down as low as 0.3. In the last five years they have had a nice growth potential and have reached 6.1% of yearly growth this would then correspond to a motivated P/E of 19 to 21. So the market is very clearly overvaluing Wolverine at the moment. They pay a silly dividend of 0.64% which correspond to 22% of their earnings so at least there is some space to increase that value.
Conclusion: It is an interesting company with a broad brands base that will build value year after year. Today due to the high P/E, P/B and low dividends I see no interest in stepping into this company since it is definitely not cheap.

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