There isn't anything hush about this puppy. Wolverine (NYSE:WWW), maker of such popular brands as Hush Puppies, Bates, HyTest, Merrell, Sebago and Wolverine shoes, reported record revenue and earnings for its 2007 third quarter.

Record-Setting Q3
Third-quarter revenue climbed to $310.2 million from $298.9 million in the same quarter a year ago and earnings per share increased to $54 cents per share from 46 cents per share in the year prior. If you work the math, you'll see a 17.4% gain in earnings on a 3.8% increase in revenue.

For the first nine months of its fiscal year, the numbers are bit more sedate, but they are still impressive. Revenue amounted to $841.5 million compared with $800.2 million a year ago and earnings per share came in at $1.21 per share, up from $1.05 per share during the same period in 2006. That is a 15.2% gain in earnings on a 5.2% gain in revenue. (For more on earnings, see Earnings: Quality Means Everything and Earnings Forecasts: A Primer.)

Blake Krueger, Wolverine's president and chief executive officer, has pointed out that this is Wolverine's 21st consecutive quarter of increased revenue and earnings. He acknowledged a difficult retail environment that has led to lower store traffic, but that the company has still managed to end the quarter with an 11% order backlog. Krueger also indicated that the company had made a decision to transition out of its lower-margin businesses to focus more on the higher-margin ones.

Stephen Gulis, Wolverine's chief financial officer, reiterated that this strategy had the effect of reducing overall revenue somewhat but expanding the firm's gross margin by 100 basis points.

A Comfortable Fit
Looking ahead, the company's guidance statements were fairly conservative and pretty much in line with street estimates. Wolverine is transitioning out of its military contracts as they expire and will otherwise continue its present course of action. The firm raised its estimates by a penny per share for the entire year (to $1.60-$1.64). Analysts polled by Thompson Financial expect to see an average of $1.64 per share on revenue of approximately $1.2 billion.

For 2008, the company's goals are revenue of $1.25 billion to $1.28 billion and generating earnings of $1.78 to $1.84 per share. Analysts are expecting $1.85 on revenue of $1.3 billion.

It should be noted that Wolverine's return on equity has improved from averaging 14.8% over the previous five years to come in at 18.4% last year. For a stock that appears to be very conservative, it has done quite well over the last few years. Over the last two years it has risen from the low $20s to the high $20s. Five years ago it was trading at roughly $9 per share.

Bottom Line
Let's think about this business for a minute. While shoes are not nearly exciting as fighter jets or the latest biotech gadget, when you need a pair of shoes, you absolutely have to get a pair. Unless you plan on going barefoot, there is no other alternative. That simple fact may help explain why Wolverine has been so consistently successful, and why it may continue to be successful in the future.

Looking to cook up a market-stomping stock portfolio? Check out our FREE report "7 Ingredients to Market Beating Stocks" and get started right now!

Related Articles
  1. Stock Analysis

    Net Neutrality: Pros and Cons

    The fight over net neutrality has become an amazing spectacle. But at its core, it's yet another skirmish in cable television's war to remain relevant.
  2. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  3. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  4. Mutual Funds & ETFs

    ETF Analysis: ProShares Large Cap Core Plus

    Learn information about the ProShares Large Cap Core Plus ETF, and explore detailed analysis of its characteristics, suitability and recommendations.
  5. Mutual Funds & ETFs

    ETF Analysis: iShares Core Growth Allocation

    Find out about the iShares Core Growth Allocation Fund, and learn detailed information about its characteristics, suitability and recommendations.
  6. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  7. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  8. Professionals

    What to do During a Market Correction

    The market has what? Here's what you should consider rather than panicking.
  9. Mutual Funds & ETFs

    ETF Analysis: Vanguard Mid-Cap Value

    Take an in-depth look at the Vanguard Mid-Cap Value ETF, one of the largest and most popular mid-cap funds in the U.S. equity space.
  10. Mutual Funds & ETFs

    ETF Analysis: Schwab US Broad Market

    Take an in-depth look at the Schwab U.S. Broad Market ETF, an incredibly low-cost fund based on a wide selection of the U.S. equity market.
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  3. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  4. PT (Perseroan Terbatas)

    An acronym for Perseroan Terbatas, which is Limited Liability ...
  5. Ltd. (Limited)

    An abbreviation of "limited," Ltd. is a suffix that ...
  6. BHD (Berhad)

    The suffix Bhd. is an abbreviation of a Malay word "berhad," ...
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>

You May Also Like

Trading Center

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!