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At US$9.09, Is It Time To Put Wolverine World Wide, Inc. (NYSE:WWW) On Your Watch List?

Wolverine World Wide, Inc. (NYSE:WWW), is not the largest company out there, but it led the NYSE gainers with a relatively large price hike in the past couple of weeks. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s take a look at Wolverine World Wide’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Wolverine World Wide

Is Wolverine World Wide Still Cheap?

According to my valuation model, Wolverine World Wide seems to be fairly priced at around 18% below my intrinsic value, which means if you buy Wolverine World Wide today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $11.11, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Wolverine World Wide’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will Wolverine World Wide generate?

earnings-and-revenue-growth
earnings-and-revenue-growth

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of Wolverine World Wide, it is expected to deliver a negative revenue growth of -12% over the next couple of years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What This Means For You

Are you a shareholder? WWW seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on WWW for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on WWW should the price fluctuate below its true value.

So while earnings quality is important, it's equally important to consider the risks facing Wolverine World Wide at this point in time. For example, we've found that Wolverine World Wide has 2 warning signs (1 is potentially serious!) that deserve your attention before going any further with your analysis.

If you are no longer interested in Wolverine World Wide, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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