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Here's How Wolverine (WWW) is Poised Ahead of Q3 Earnings

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Zacks Equity Research
·3 min read
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Wolverine World Wide, Inc. WWW is scheduled to report third-quarter 2020 numbers on Nov 5, before the opening bell. The Zacks Consensus Estimate for third-quarter earnings is pegged at 29 cents, which increased a penny in the past seven days but shows a decline of 57% from 68 cents earned in the year-ago quarter. Moreover, the consensus mark for quarterly revenues is pinned at $456.1 million, which indicates a decline of over 20% from the year-ago quarter’s tally.

However, the Rockford, MI-based company delivered an earnings surprise of 56.3% in the last four quarters, on average.

Key Factors

The impact of coronavirus on Wolverine's third-quarter performance cannot be ignored. This, along with persistence of sluggish trends in casual footwear, as well as soft performance at Sperry and Keds brands might get reflected in the company’s results. Management at its second-quarter earnings call on Aug 5 cautioned about a challenging second-half 2020 and guided revenues decline of less than 25% for the third quarter. Although the company has been managing costs, management projected an increase in SG&A expenses for the quarter under review from the second quarter on higher business demands and growth investments. Cumulatively, these factors have most likely marred the company’s top and bottom lines in the to-be-reported quarter.

Nonetheless, Wolverine’s focus on enhancing omni-channel and e-commerce capabilities are likely to have favorably impacted the to-be-reported quarter’s performance. The company has been utilizing its digital capabilities to enhance speed of information and product flow. In order to support growth in the digital arena, the company has been strengthening its distribution centers. Product innovation, new-customer acquisition and robust customer engagement have been fueling online demand. In addition, Wolverine’s international business appears encouraging. Management, at its last earnings call, had projected EMEA to outperform the other regions, partly due to the relative strength in the company’s own businesses, followed by Asia Pacific.

What Our Zacks Model Says

Our proven model predicts an earnings beat for Wolverine this reporting cycle. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Wolverine carries a Zacks Rank #3 and an Earnings ESP of +8.77%.

More Stocks With Favorable Combinations

Here are a few other companies you may want to consider, as our model shows that these too have the right combination to post an earnings beat:

Hanesbrands HBI has an Earnings ESP of +9.80% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Abercrombie ANF has an Earnings ESP of +125.96% and a Zacks Rank #3.

Gap GPS has an Earnings ESP of +0.52% and a Zacks Rank #3.

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