Yahoo Finance Wolverine (WWW) Down 5.9% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Wolverine World Wide (WWW). Shares have lost about 5.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Wolverine due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Wolverine Reports Wider Q4 Loss, Revenues Rise Y/Y
Wolverine reported a wider-than-expected loss per share during fourth-quarter 2022. The top line met the Zacks Consensus Estimate and increased year over year.
Q4 Insights
Wolverine posted a fourth-quarter adjusted loss of 15 cents a share, wider than the Zacks Consensus Estimate of a loss of 14 cents. At constant currency, loss per share came in at 10 cents. The company reported earnings of 37 cents per share.
Revenues of $665 million matched the Zacks Consensus Estimate but increased 4.6% year over year, courtesy of healthy international sales as well as higher revenues at most of the segments and brands. Revenues jumped 8.4% in constant currency. Direct-to-consumer (DTC) revenues of $224.4 million were flat year over year. WWW’s international business was robust in the reported quarter and improved 22.2% to $281.5 million. International revenues increased 31.9% in constant currency.
Coming to segments, Active Group’s revenues rose 16.8% year over year to $397.6 million, while the metric at Work Group grew 3.3% to $154.5 million. Revenues at Lifestyle Group and Other fell 20.6% and 35.1%, respectively, to $100.7 million and $12.2 million.
Brand wise, Merrell revenues surged 27% year over year to $193.9 million, Saucony revenues increased 24.8% to $121.3 million, Sperry revenues decreased 28% to $68 million and Wolverine revenues rose 9.6% to $71.8 million. Sweaty Betty generated revenues of $72.8 million, down 7% year over year.
Margins
Adjusted gross profit was $225.2 million, down 16.4% year over year. Also, the adjusted gross margin contracted 850 basis points (bps) year over year to 33.9%.
Adjusted SG&A expenses increased 6.2% to $238.3 million. Adjusted operating loss came in at $13.1 million against an adjusted operating income of $45 million.
Other Financials
Wolverine ended the quarter with cash and cash equivalents of $131.5 million, long-term debt of $723 million and stockholders' equity of $339 million. Net debt was $1.02 billion at the end of the reported quarter. WWW had total liquidity of nearly $685 million at the end of the fourth quarter. Inventory at the end of the reported quarter was $745.2 million, down $90 million from the previous quarter.
During 2022, Wolverine paid out cash dividends of $32.8 million.
Outlook
For 2023, revenues from the ongoing business are projected in the range of $2.53-$2.58 billion, representing an increase of 0-2% and constant currency growth of 1-3%. Further, the gross margin is likely to be at 41.2% and the adjusted gross margin is anticipated to be 42% for the year. The operating margin is estimated to be nearly 8.7% and the adjusted operating margin is expected to be 8.5%.
Earnings per share (EPS) are envisioned to be between $1.50 and $1.70 and adjusted EPS in the bracket of $1.40-$1.60. This guidance includes nearly 14 cents of the adverse impact of foreign currency exchange rate fluctuations.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -72.97% due to these changes.
VGM Scores
At this time, Wolverine has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Wolverine has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Wolverine World Wide, Inc. (WWW) : Free Stock Analysis Report
