One stock that has been attracting some attention lately is Wolverine Worldwide Inc. (NYSE: WWW).
For example, Wolverine’s stock price rose from $24.41 on 10 August 2020 to $37.19 on 11 August 2021. Furthermore, Wolverine’s share price hit a high of $44.21 on 7 May 2021.
So what is Wolverine Worldwide (WWW) and why does Mr. Market love it? Okay, Wolverine Worldwide has nothing to do with the iconic Marvel Comics character Wolverine or the University of Michigan. Instead, Wolverine Worldwide is a shoe and clothing company.
The name Wolverine comes from a popular brand of work boots that dates to 1914. The Wolverine website claims they made the boots from Wolverine Horsehide Leather.
What is Wolverine Worldwide?
Today, Wolverine Worldwide (NYSE: WWW) owns several shoe and clothing brands. Those brands include Wolverine, Keds, Merrell, Sperry, Stride Rite, Sperry, Saucony, Chaco, Hush Puppies, HYTEST, Bates, Cat Footwear, and Harley-Davidson Footwear.
Hence, Wolverine is a consumer products company with some exposure to retail. Consequently, people will ask if Wolverine makes money. Wolverine makes some money.
The company reported quarterly revenues of $632 million, a quarterly gross profit of $63.80 million, and a quarterly operating income of $64 million on 30 June 2021. Those numbers grew from $349.10 million in quarterly revenues, $151 million in quarterly gross profit, and $42.60 million in quarterly operating income on 30 June 2020.
Those numbers are small, but there is one reason investors are interested in Wolverine Worldwide. Stockrow estimates Wolverine’s revenues grew by 81.01% in the quarter ending on 30 June 2021.
Hence, Wolverine is capable of extraordinary growth. In contrast, Wolverine’s revenues shrank by 38.6% in the quarter ending on 30 June 2020.
How Much Cash Does Wolverine Worldwide Generate?
Wolverine (WWW) generates tiny amounts of cash. The company reported a quarterly operating cash flow of $25.40 million on 30 June 2021.
Similarly, the quarterly ending cash flow was -$19 million on 30 June 2021. However, the quarterly ending cash flow grew from -$50 million on 30 June 2020. Yet the quarterly operating cash flow was $115.6 million on 30 June 2020.
However, Wolverine Worldwide pays its debts. The company reported a -$40.20 million quarterly financing cash flow on 30 June 2021. That number rose from -$186 million on 30 June 2020.
Notably, Wolverine’s total debts shrank from $1.201 billion on 30 June 2020 to $718.4 million on 31 June 2021. Thus, Wolverine finished the pandemic with less debt.
What Value Does Wolverine Worldwide have?
I think Wolverine (NYSE: WWW) has little value. For example, the company had $2.303 billion in total assets on 30 June 2021. The total assets fell from $2.589 billion on 30 June 2020.
Similarly, the cash and short-term investments fell from $423 million on 30 June 2020 to $345 million on 30 June 2021. Hence, Wolverine finished the pandemic with less debt, less cash, and less value.
However, Wolverine could recover as the economy reopens. Notably, people could go back to work and require work boots and sensible shoes again.
There is some evidence of such a recovery. The US Commerce Department estimates that US retail sails grew by 18% in June 2021 in comparison with June 2020. However, retail sales only rose by 0.6% between May and June 2021, CNBC claims.
Wolverine could benefit from that growth because people will want more shoes. In particular, Wolverine can sell its shoes through either brick and mortar and online outlets. Hence, Wolverine could be Amazon (AMZN) proof and survive the escalating retail apocalypse.
Is Wolverine Worldwide a Value Investment?
I do not consider Wolverine Worldwide (WWW) a value investment because it generates tiny amounts of cash. In particular, I think Wolverine has a low margin of safety because it has almost no cash. Moreover, the company is losing value.
However, Wolverine will pay a 10¢ quarterly dividend on 30 September 2021. Overall, Wolverine paid a 40¢ forward annualized dividend and a 1.15% dividend yield on 6 August 2021. Hence, I consider Wolverine a tolerable dividend stock but a poor investment.
I think investors need to avoid Wolverine Worldwide because there is no evidence this company can generate significant amounts of cash. Even if America’s economy recovers from the pandemic, Wolverine is still a weak company you need to avoid.