On Friday, UBS signaled a positive shift in perspective on Wolverine World Wide (NYSE:WWW), raising the stock from Neutral to Buy and increasing the price target to $20.00, up from the previous $13.00. The upgrade comes as the firm acknowledges three primary factors that could enhance the company's market performance.
Firstly, UBS noted that Wolverine World Wide's sales growth rate is expected to accelerate. This anticipation is based on the company's recent efforts to streamline its portfolio and allocate more resources to its Active segment. The firm believes that this shift will create a positive narrative around the rate of change, which could positively influence market sentiment toward the stock.
Secondly, the firm sees potential for earnings to surpass current market forecasts for the fiscal years 2024 and 2025. The UBS estimates for earnings per share (EPS) are 13% and 11% higher than the consensus, respectively, indicating a more optimistic outlook than that of the broader market.
The third reason cited for the upgrade is the attractive EPS growth algorithm that UBS projects for Wolverine World Wide.
The combination of mid-single-digit percentage sales growth, margin recovery, and the strategic use of free cash flow for debt repayment and share repurchases is expected to result in a 24% compound annual growth rate (CAGR) in EPS after the fiscal year 2024. UBS suggests that this growth potential is currently undervalued, with the stock trading at a forward price-to-earnings (P/E) ratio of 10.7 times.
The firm anticipates that upcoming EPS beats over the next twelve months will act as a catalyst for P/E expansion to 12 times, aligning the stock price with the newly set $20 price target.
In other recent news, Wolverine World Wide, Inc. has made significant strides in its business operations. The company reported a robust start to fiscal 2024, surpassing both revenue and earnings expectations for the first quarter.
This achievement was driven by investments in brand marketing, product development, strategic partnerships, and new licensing agreements. Despite forecasting a revenue decline for the year, management remains optimistic about future performance, with a focus on expanding gross margins and brand investment to accelerate growth in 2025.
In the realm of executive appointments, Saucony, a division of Wolverine World Wide, has named Joy Allen-Altimare as the new global Chief Marketing Officer.
Allen-Altimare, who brings over two decades of marketing expertise, will focus on brand positioning, direct-to-consumer campaigns, and digital and international growth initiatives. In addition, Taryn Miller has been appointed as the new CFO of Wolverine World Wide, a move that is expected to strengthen the company's financial leadership.
InvestingPro Insights
With UBS's recent upgrade of Wolverine World Wide, investors are keenly watching the company's performance metrics. According to real-time data from InvestingPro, Wolverine World Wide has a market capitalization of $1.01 billion and is trading at a high Price / Book multiple of 4.02 as of the last twelve months ending Q1 2024. This valuation suggests that the market has significant expectations for the company's book value growth. Additionally, the firm has maintained a steady dividend payment, with a current yield of 3.15%, showcasing its commitment to returning value to shareholders for 37 consecutive years.
InvestingPro Tips highlight that analysts predict the company will be profitable this year, aligning with UBS's optimistic EPS forecasts. Moreover, Wolverine World Wide has experienced a strong return over the last three months, with a 30.72% price total return, and an even more impressive six-month price uptick of 56.54%, indicating robust investor confidence. For those looking to delve deeper into the financials and future projections for Wolverine World Wide, there are additional InvestingPro Tips available. By using the coupon code PRONEWS24, readers can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, gaining access to valuable insights that could inform investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.