Steven Madden Limited

Shoes are still hot. Steven Madden Limited ( SHOO - Snapshot Report ) reported record second quarter results in August as sales jumped 32%. This Zacks #2 Rank (buy) stock has also moved into value territory, with a forward P/E of 14.7.

Steve Madden manufactures footwear and accessories for men, women and children that are sold through 83 company-owned retail stores, department stores, specialty retailers and at the company's web site, www.stevemadden.com.

It is also the licensee for footwear for Elizabeth and James and l.e.i. which is sold at Wal-Mart, footwear, handbags and belts for Olsenboye, and handbags for Daisy Fuentes.

A Record Second Quarter

On Aug 2, Steve Madden reported second quarter results and surprised on the Zacks Consensus for the 7th quarter in a row. Earnings per share were 55 cents compared to the consensus of 53 cents. It made just 47 cents per share in the year ago quarter.

Net sales rose 32% to $209.2 million from $158.7 million a year ago. Sales for the wholesale business also climbed 35.6% to $175.2 million from $129.2 million in the second quarter of 2010. One of the drivers of the sales growth was strong gains in the Steve Madden Women's and International businesses.

Retail net sales grew 15.3% to $35 million. Same store sales jumped 11.6% compared to a 7.4% increase in the prior year's sales.

One area to watch closely going forward was a drop in the gross margin to 40.2% from 43.4% in the year ago quarter.

Raised Full Year Guidance

What slowdown? Steve Madden expects sales to increase 47% to 49% for the full year compared to 2010.

The company also revised its EPS guidance higher to the range of $2.15 to $2.20 from the prior guidance of $2.03 to $2.10.

2011 Zacks Consensus Estimate Rises

The analysts are bullish on the company's 2011 prospects.

The 2011 Zacks Consensus Estimate has risen to $2.18 from $2.15 in the last 60 days which is smack in the middle of the company's guidance range.

This is earnings growth of 22% as the company made just $1.79 in 2010.

Don't count out Steve Madden in 2012 either. Analysts are looking for another 19% earnings growth.

Shares Sell Off

Steve Madden had been an incredible momentum stock off the 2009 lows. I haven't been able to write about it as a value stock since November 2009 as its valuations have been on the higher side.

But the recent sell off combined with still rising earnings means that the shares have become more attractive.

The company has a P/E of 14.7 and a price-to-book ratio of 3.3. It's P/B is a little higher than I'd like as most of the value stocks I cover are under 3.0 but it's still an attractive valuation.

You're also getting double digit growth and a 1-year return on equity of 22.2%.

With a record quarter in Q2, it appears that Steve Madden is, so far, maneuvering this slowdown successfully.

This Week's Value Zacks Rank Buy Stocks

In July, Wabtec Corporation (WAB) reported record quarterly earnings and raised full year guidance. Will this Zacks #1 Rank (strong buy) keep it going in the face of a global slowdown? Read the full article.

Maidenform Brands, Inc. (MFB) survived the great recession based on the strength of its brand and hot shapewear sales. This Zacks #1 Rank (strong buy) is expected to see yet another year of double digit earnings growth. It also has attractive valuations, with a forward P/E of just 10.5. Read the full article.

Don't count out the retailers just yet. Men's Wearhouse Inc. (MW) still expects double digit sales growth in 2011. This Zacks #1 Rank (strong buy) is a value stock with a forward P/E of 12.9. Read the full article.

Looking for a dirt cheap stock? Valero Energy Corporation (VLO) is trading at just 4.6x forward estimates. But the company is also expected to post triple-digit earnings growth in 2011. This Zacks #1 Rank (strong buy) is a double threat of value and growth with a PEG ratio of only 0.5. Read the full article.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her at twitter.com/traceyryniec.