Wolverine World Wide Inc Valuation – September 2016 $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 Stocks for Using A Benjamin Graham Value Investing Strategy – August 2016.  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 a range 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’s products are marketed around the world in approximately 200 countries and territories through Company-owned wholesale and consumer-direct operations, and third-party licensees and distributors. The Company operates in three operating segments: Lifestyle Group, consisting of Sperry 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, and Chaco 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.

WWW Chart

WWW data by YCharts

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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. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, 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 – August 2016

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 $2,259,891,278 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.08 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 50.41% Pass
6. Moderate PEmg Ratio PEmg < 20 20.34 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.25 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 3.08 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.14 Fail
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 August 2016

EPSmg $1.15
MG Growth Estimate 2.95%
MG Value $16.50
Opinion Overvalued
MG Grade C+
MG Value based on 3% Growth $16.62
MG Value based on 0% Growth $9.74
Market Implied Growth Rate 5.92%
Current Price $23.31
% of Intrinsic Value 141.25%

Wolverine World Wide, Inc. qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the high PEmg ratio. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $0.96 in 2012 to an estimated $1.15 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.92% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Wolverine World Wide, Inc. revealed the company was trading above its Graham Number of $16.02. The company pays a dividend of $0.24 per share, for a yield of 1% Its PEmg (price over earnings per share – ModernGraham) was 20.34, which was below the industry average of 26.26, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-4.56.

Wolverine World Wide, Inc. receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

WWW charts August 2016

Net Current Asset Value (NCAV) -$4.56
Graham Number $16.02
PEmg 20.34
Current Ratio 3.08
PB Ratio 2.25
Current Dividend $0.24
Dividend Yield 1.03%
Number of Consecutive Years of Dividend Growth 0


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Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2016
Total Current Assets $1,020,500,000
Total Current Liabilities $331,000,000
Long-Term Debt $788,300,000
Total Assets $2,453,500,000
Intangible Assets $1,207,800,000
Total Liabilities $1,458,700,000
Shares Outstanding (Diluted Average) 96,100,000

Earnings Per Share History

Next Fiscal Year Estimate $1.14
Dec2015 $1.20
Dec2014 $1.30
Dec2013 $0.99
Dec2012 $0.81
Dec2011 $1.24
Dec2010 $1.06
Dec2009 $0.62
Dec2008 $0.95
Dec2007 $0.85
Dec2006 $0.74
Dec2005 $0.64
Dec2004 $0.55
Dec2003 $0.43
Dec2002 $0.38
Dec2001 $0.36
Dec2000 $0.09
Dec1999 $0.26
Dec1998 $0.32
Dec1997 $0.32
Dec1996 $0.25

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.15
Dec2015 $1.14
Dec2014 $1.10
Dec2013 $0.98
Dec2012 $0.96
Dec2011 $1.00
Dec2010 $0.87
Dec2009 $0.77
Dec2008 $0.81
Dec2007 $0.71
Dec2006 $0.61
Dec2005 $0.52
Dec2004 $0.43
Dec2003 $0.34
Dec2002 $0.30
Dec2001 $0.26
Dec2000 $0.22

Recommended Reading:

Other ModernGraham posts about the company

6 Best Stocks For Value Investors This Week – 5/14/16
Wolverine World Wide Inc Valuation – May 2016 $WWW
Wolverine World Wide Inc. Analysis – September 2015 Update $WWW
Wolverine World Wide Analysis – June 2015 Update $WWW
18 Companies in the Spotlight This Week – 3/21/15

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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.

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