Wolverine World Wide Inc. Analysis – September 2015 Update $WWW

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – August 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Wolverine World Wide Inc. (WWW) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Wolverine World Wide, Inc. is a designer, manufacturer and marketer of casual footwear and apparel, outdoor and athletic footwear and apparel, children’s footwear, industrial work boots and apparel, and uniform shoes and boots. The Company operates in three operating segments: Lifestyle Group, consisting of Sperry Top-Sider footwear and apparel, Stride Rite footwear and apparel, Hush Puppies footwear and apparel, Keds footwear and apparel, and Soft Style footwear; Performance Group, consisting of Merrell footwear and apparel, Saucony footwear and apparel, Chaco footwear, and Cushe footwear, and Heritage Group, consisting of Wolverine footwear and apparel, Cat footwear, Bates uniform footwear, Sebago footwear and apparel, Harley-Davidson footwear, and HyTest safety footwear. The Other category consists of the Company’s multi-brand consumer-direct business, leather marketing operations, and sourcing operations that include third-party commission revenues.


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Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.


Downloadable PDF version of this valuation:

ModernGraham Valuation of WWW – September 2015

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $2,335,231,654 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.83 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 44.77% Pass
6. Moderate PEmg Ratio PEmg < 20 18.94 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.31 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.83 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.10 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

WWW value Chart September 2015

EPSmg $1.20
MG Growth Estimate 2.90%
MG Value $17.11
Opinion Overvalued
MG Value based on 3% Growth $17.34
MG Value based on 0% Growth $10.17
Market Implied Growth Rate 5.22%
Current Price $22.65
% of Intrinsic Value 132.36%

Wolverine World Wide Inc. qualifies for both the Defensive Investor and for the Enterprising Investor.  The company passes all of the requirements for both investor types, a rare accomplishment indicative of a strong financial position.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $1.00 in 2011 to an estimated $1.20 for 2015.  This level of demonstrated earnings growth does not support the market’s implied estimate of 5.22% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Wolverine World Wide Inc. (WWW)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

WWW Charts September 2015

Net Current Asset Value (NCAV) -$4.45
Graham Number $17.31
PEmg 18.94
Current Ratio 2.83
PB Ratio 2.31
Dividend Yield 1.06%
Number of Consecutive Years of Dividend Growth 2



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Most Recent Balance Sheet Figures

Total Current Assets $1,108,000,000
Total Current Liabilities $391,000,000
Long-Term Debt $787,900,000
Total Assets $2,554,600,000
Intangible Assets $1,229,700,000
Total Liabilities $1,559,900,000
Shares Outstanding (Diluted Average) 101,600,000

Earnings Per Share History

Next Fiscal Year Estimate $1.38
Dec14 $1.30
Dec13 $0.99
Dec12 $0.82
Dec11 $1.24
Dec10 $1.06
Dec09 $0.62
Dec08 $0.95
Dec07 $0.85
Dec06 $0.74
Dec05 $0.64
Dec04 $0.55
Dec03 $0.42
Dec02 $0.38
Dec01 $0.36
Dec00 $0.09
Dec99 $0.26
Dec98 $0.32
Dec97 $0.32
Dec96 $0.26
Dec95 $0.21

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.20
Dec14 $1.10
Dec13 $0.98
Dec12 $0.96
Dec11 $1.00
Dec10 $0.87
Dec09 $0.77
Dec08 $0.81
Dec07 $0.71
Dec06 $0.61
Dec05 $0.52
Dec04 $0.42
Dec03 $0.34
Dec02 $0.30
Dec01 $0.26
Dec00 $0.22
Dec99 $0.28

Recommended Reading:

Other ModernGraham posts about the company

Wolverine World Wide Analysis – June 2015 Update $WWW
18 Companies in the Spotlight This Week – 3/21/15
Wolverine World Wide Inc. Quarterly Valuation – March 2015 $WWW
26 Companies in the Spotlight This Week – 12/13/14
Wolverine World Wide Quarterly Valuation – December 2014 $WWW

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The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

One thought on “Wolverine World Wide Inc. Analysis – September 2015 Update $WWW

  1. Jeff Partlow says:

    WWW is a very interesting and unusual situation. It passed both the Defensive and Enterprising criteria, yet the stock was rated “OVERVALUED”. This occurred for only 1.5% of the stocks (6 of 391) in the September monthly screen.
    Note to self: Look at NPK in detail since it qualifies as a Defensive Investor stock but was indicated as over 400% overvalued in the Sept screening.

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