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Steven Madden Stock Seems Attractive With P/E Multiple of 16.20X
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Steven Madden, Ltd. (SHOO - Free Report) is currently trading at a notably low price-to-earnings (P/E) multiple, which is below the Zacks Shoes and Retail Apparel industry and broader Consumer Discretionary averages. SHOO's forward 12-month P/E ratio is 16.20, lower than the industry average of 21.78 and the sector average of 17.27.
The stock is undervalued compared with its industry peers, thereby offering compelling value to investors looking for exposure to the retail apparel sector. Furthermore, SHOO's Value Score of A underscores its appeal as a potential investment.
SHOO gained 45.6% against the industry’s sharp 15.4% decline in the past year. The company’s strategic approach, along with its market expansion and product diversification endeavors, has helped it outperform the broader sector and the S&P 500 index, which grew 8.5% and 25.7%, respectively, during the same period. Closing at $45.76 on Monday, Steven Madden’s stock is currently trading 3% below its 52-week high of $47.24, attained on July 31, 2024.
Image Source: Zacks Investment Research
Moreover, technical indicators are supportive of Steven Madden’s strong performance. The stock is trading above both its 50-day and 200-day moving averages, thus indicating robust upward momentum and price stability. This technical strength reflects positive market perception and confidence in the company’s financial health and prospects.
SHOO's Strategic Growth Driven by Diversification, Expansion
Steven Madden has successfully implemented a strategic approach to drive growth across multiple segments, with a strong emphasis on its direct-to-consumer (DTC) business and international markets. The company's expansion beyond footwear into categories such as handbags and apparel, along with investments in digital capabilities, resulted in substantial revenue gains across these segments during the second quarter. The acquisition of Almost Famous has further strengthened Steven Madden's apparel offerings, contributing to the its robust growth trajectory.
The wholesale segment delivered strong results, with revenues increasing 22.5% year over year to $385.3 million in the second quarter. Notably, wholesale accessories and apparel revenues surged 86%, showcasing the company’s successful diversification beyond its core footwear segment. Excluding the Almost Famous acquisition, wholesale revenues grew 8.2% while accessories and apparel revenues rose 29.8%.
The DTC segment also displayed resilience, with revenues increasing 6.4% year over year to $136.4 million. Comparable DTC sales grew 4.1%, driven by strong product assortments and effective inventory management, which minimized the need for promotional discounts.
In addition to product diversification, Steven Madden has been aggressively expanding its international presence, identifying it as a key long-term growth driver. International revenues grew 13% year over year in the second quarter, with the EMEA region emerging as a standout performer. The company expects EMEA revenues to grow more than 20% in 2024.
Image Source: Zacks Investment Research
Steven Madden's Financial Strength and Promising Outlook
Steven Madden's second-quarter financials highlight its strong fiscal health and prudent capital management. As of June 30, 2024, the company held $180.5 million in cash and cash equivalents, along with $11.8 million in short-term investments, demonstrating a solid liquidity position. Notably, it had no outstanding debt, reflecting its careful financial stewardship.
The repurchase of $38.2 million in common stock, including shares acquired through employee stock award settlements, underscores the company’s confidence in its valuation and its commitment to returning value to shareholders. Additionally, the approval of a 21-cent quarterly dividend, payable on Sept. 23, 2024, to shareholders of record as of Sept. 13, further reinforces its strong financial footing and shareholder-friendly policies.
Looking ahead, Steven Madden is well-positioned to capitalize on growth opportunities in both domestic and international markets. The recovery in the U.S. wholesale footwear business is a positive sign of inventory normalization and improved relationships with key retail partners. The company expects 2024 revenues to increase in the band of 11-13% from 2023, with adjusted earnings per share (EPS) projected to be in the range of $2.55-$2.65 compared with $2.30 in 2023.
Conclusion
Investors should consider Steven Madden stock due to its strong financial position, strategic growth initiatives and attractive valuation. The company's focus on expanding its product offerings, particularly in apparel and accessories, coupled with its successful international expansion, positions it well for continued growth.
In addition, SHOO's strong liquidity, debt-free balance sheet and commitment to returning value to shareholders through stock buybacks and dividends further enhance its appeal. With a Zacks Rank #2 (Buy), the stock is well-positioned for long-term growth and value creation, making it an attractive investment opportunity.
Boot Barn operates as a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Boot Barn’s fiscal 2025 earnings and sales indicates growth of 10.7% and 11.6%, respectively, from the fiscal 2024 reported figures. BOOT has a trailing four-quarter average earnings surprise of 7.1%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It sports a Zacks Rank of 1 at present. ANF delivered a 16.8% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2025 earnings and sales indicates growth of 63.4% and 12.6%, respectively, from the fiscal 2024 reported levels. ANF has a trailing four-quarter average earnings surprise of 28%.
Deckers is a leading designer, producer and brand manager of innovative, niche footwear and accessories. It currently has a Zacks Rank of 2.
The Zacks Consensus Estimate for Deckers’ fiscal 2025 earnings and sales indicates growth of 8.4% and 11.5%, respectively, from the year-ago actuals. DECK has a trailing four-quarter average earnings surprise of 47.2%.
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Steven Madden Stock Seems Attractive With P/E Multiple of 16.20X
Steven Madden, Ltd. (SHOO - Free Report) is currently trading at a notably low price-to-earnings (P/E) multiple, which is below the Zacks Shoes and Retail Apparel industry and broader Consumer Discretionary averages. SHOO's forward 12-month P/E ratio is 16.20, lower than the industry average of 21.78 and the sector average of 17.27.
The stock is undervalued compared with its industry peers, thereby offering compelling value to investors looking for exposure to the retail apparel sector. Furthermore, SHOO's Value Score of A underscores its appeal as a potential investment.
SHOO gained 45.6% against the industry’s sharp 15.4% decline in the past year. The company’s strategic approach, along with its market expansion and product diversification endeavors, has helped it outperform the broader sector and the S&P 500 index, which grew 8.5% and 25.7%, respectively, during the same period. Closing at $45.76 on Monday, Steven Madden’s stock is currently trading 3% below its 52-week high of $47.24, attained on July 31, 2024.
Image Source: Zacks Investment Research
Moreover, technical indicators are supportive of Steven Madden’s strong performance. The stock is trading above both its 50-day and 200-day moving averages, thus indicating robust upward momentum and price stability. This technical strength reflects positive market perception and confidence in the company’s financial health and prospects.
SHOO's Strategic Growth Driven by Diversification, Expansion
Steven Madden has successfully implemented a strategic approach to drive growth across multiple segments, with a strong emphasis on its direct-to-consumer (DTC) business and international markets. The company's expansion beyond footwear into categories such as handbags and apparel, along with investments in digital capabilities, resulted in substantial revenue gains across these segments during the second quarter. The acquisition of Almost Famous has further strengthened Steven Madden's apparel offerings, contributing to the its robust growth trajectory.
The wholesale segment delivered strong results, with revenues increasing 22.5% year over year to $385.3 million in the second quarter. Notably, wholesale accessories and apparel revenues surged 86%, showcasing the company’s successful diversification beyond its core footwear segment. Excluding the Almost Famous acquisition, wholesale revenues grew 8.2% while accessories and apparel revenues rose 29.8%.
The DTC segment also displayed resilience, with revenues increasing 6.4% year over year to $136.4 million. Comparable DTC sales grew 4.1%, driven by strong product assortments and effective inventory management, which minimized the need for promotional discounts.
In addition to product diversification, Steven Madden has been aggressively expanding its international presence, identifying it as a key long-term growth driver. International revenues grew 13% year over year in the second quarter, with the EMEA region emerging as a standout performer. The company expects EMEA revenues to grow more than 20% in 2024.
Image Source: Zacks Investment Research
Steven Madden's Financial Strength and Promising Outlook
Steven Madden's second-quarter financials highlight its strong fiscal health and prudent capital management. As of June 30, 2024, the company held $180.5 million in cash and cash equivalents, along with $11.8 million in short-term investments, demonstrating a solid liquidity position. Notably, it had no outstanding debt, reflecting its careful financial stewardship.
The repurchase of $38.2 million in common stock, including shares acquired through employee stock award settlements, underscores the company’s confidence in its valuation and its commitment to returning value to shareholders. Additionally, the approval of a 21-cent quarterly dividend, payable on Sept. 23, 2024, to shareholders of record as of Sept. 13, further reinforces its strong financial footing and shareholder-friendly policies.
Looking ahead, Steven Madden is well-positioned to capitalize on growth opportunities in both domestic and international markets. The recovery in the U.S. wholesale footwear business is a positive sign of inventory normalization and improved relationships with key retail partners. The company expects 2024 revenues to increase in the band of 11-13% from 2023, with adjusted earnings per share (EPS) projected to be in the range of $2.55-$2.65 compared with $2.30 in 2023.
Conclusion
Investors should consider Steven Madden stock due to its strong financial position, strategic growth initiatives and attractive valuation. The company's focus on expanding its product offerings, particularly in apparel and accessories, coupled with its successful international expansion, positions it well for continued growth.
In addition, SHOO's strong liquidity, debt-free balance sheet and commitment to returning value to shareholders through stock buybacks and dividends further enhance its appeal. With a Zacks Rank #2 (Buy), the stock is well-positioned for long-term growth and value creation, making it an attractive investment opportunity.
Other Key Picks
Other top-ranked stocks are Boot Barn Holdings, Inc. (BOOT - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) and Deckers Outdoor Corporation (DECK - Free Report) .
Boot Barn operates as a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Boot Barn’s fiscal 2025 earnings and sales indicates growth of 10.7% and 11.6%, respectively, from the fiscal 2024 reported figures. BOOT has a trailing four-quarter average earnings surprise of 7.1%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It sports a Zacks Rank of 1 at present. ANF delivered a 16.8% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2025 earnings and sales indicates growth of 63.4% and 12.6%, respectively, from the fiscal 2024 reported levels. ANF has a trailing four-quarter average earnings surprise of 28%.
Deckers is a leading designer, producer and brand manager of innovative, niche footwear and accessories. It currently has a Zacks Rank of 2.
The Zacks Consensus Estimate for Deckers’ fiscal 2025 earnings and sales indicates growth of 8.4% and 11.5%, respectively, from the year-ago actuals. DECK has a trailing four-quarter average earnings surprise of 47.2%.