Wolverine World Wide Upgraded By This Firm, But Bulls Be Warned

Sterne Agee CRT analyst Sam Poser upgraded Wolverine World Wide, Inc. WWW on Tuesday, noting "things aren't pretty, but the story has played out." The firm now holds a Neutral rating on shares versus a previously held Underperform.

Despite the upgrade, the firm cut its fourth quarter earnings estimates and said it expects "another" miss when the company reports earnings next. However, this might not push shares much further than they've already fallen.

"As the slow and promotional environment persisted throughout the quarter, we do not see material downside to the stock," Poser wrote. He added that any problems Wolverine is currently facing are alraedy "built into the stock price."

Why Estimates Were Lowered

Still, investors need to understand why Poser lowered his estimates on the company. Here's his reasoning:

• The company isn't expected to fix "issues" with its Merrell and Sperry brands in the near-term.
• Management might guide flat FY2016 earnings.
• Management didn't account for "very warm" Winter weather, which could affect inventory levels.
• Elevated promotions across the industry make it possible that Wolverine will not meet its "up slightly" gross margin guidance for the fourth quarter.