Argus Likes Wolverine World Wide After 'Solid' Q1 Report

Wolverine World Wide, Inc. WWW reported in early May its first-quarter results which turned Argus positive on the stock as the manufacturer of footwear and slippers should ramp its growth throughout 2018.

The Analyst

Argus Research's John Staszak upgraded Wolverine World Wide from Hold to Buy with a $40 price target.

The Thesis

Wolverine's Q1 was highlighted by "solid" earnings in its core business as its best brands, Merrell and Sperry, returning to growth in the quarter, Staszak said in a note. The company also saw a better-than-expected performance in the international business due to marketing initiatives and a strong product pipeline.

Looking forward to the remainder of 2018, investors should have confidence in Wolverine's ability to ramp its growth, aided by ongoing improvements in the economy and increasing consumer confidence, the analyst wrote. Moreover, the acquisition of PLG expands the company's retail footprint, especially in the athletic and children's segment.

Meanwhile, Wolverine's stock is trading at 15.3x on the analyst's 2018 forecast, which is in-line with its five-year average. Staszak said the current multiple undervalues the stock as a 18.5x multiple is more appropriate given the company's diversified portfolio of products that can perform well even in times of economic weakness.

Price Action

Shares of Wolverine were trading higher by 1.7 percent at $33.61 on Wednesday.

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