Back to top

Image: Bigstock

Steven Madden (SHOO) Up 68% in 6 Months: What's More to Know?

Read MoreHide Full Article

Fashion-footwear dealer Steven Madden, Ltd. (SHOO - Free Report) makes for a suitable portfolio pick now, thanks to immense strength in its e-commerce business. In fact, the company’s e-commerce business has been a bright spot amid the coronavirus pandemic.

Encouragingly, Steven Madden delivered the second straight quarter of more than 80% year-over-year increase in e-commerce during the third quarter of 2020. Further, digital sales grew 63.3% in the same quarter. Robust gains from increased investment in digital marketing and solid consumer reception to capabilities such as ‘try before you buy’ have been contributing to the company’s performance. We believe such a robust e-commerce business will continue to deliver growth and boost the company’s overall performance.

We note that the company’s actions, including enhancing digital initiatives, adjusting merchandise mix, and managing expense structure have been aiding it to maneuver the pandemic-induced challenges. Management at its last-earnings call had projected operating expense contraction of nearly 10% year over year for the fourth quarter of 2020. Meanwhile, strength in brands, a pristine balance sheet and a robust business model appear encouraging.

Although sluggishness in wholesale business due to a decline in the wholesale footwear and accessories/apparel revenues persists, Steven Madden is working on making the division profitable. Apparently, management had guided a sequential improvement in wholesale division for fourth-quarter 2020 on continued recovery in its flagship brand for both footwear and handbags. Markedly, the company is witnessing strength in the handbag category, including branded and private label handbags. Also, the company’s BB Dakota buyout is impressive.

Buoyed by aforesaid strengths, the Long Island City, NY-based company’s shares have appreciated 68.2% in a six-month time frame versus the industry’s 33.9% growth.

What Lies Ahead?

We note that Steven Madden is scheduled to release fourth-quarter 2020 results on Feb 25. So, let’s further analyze the company’s earnings picture. According to our Zacks Model, which says the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases chances of an earnings beat to roughly 70%, Steven Madden is most likely to beat earnings estimates this reporting cycle. This is because the company currently has an Earnings ESP of +1.61% coupled with a Zacks Rank of 2.

In fact, the Zacks Consensus Estimate for the company’s impending-quarter earnings is currently pegged at 21 cents, which moved a penny north in the past 30 days. Further, analysts polled by Zacks forecast revenues of $342.8 million for the fourth quarter of 2020.

Check Out These Other Hot Stocks

Crocs (CROX - Free Report) has a long-term earnings growth rate of 15% and currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

PVH Corp (PVH - Free Report) has an expected long-term earnings growth rate of 18% and a Zacks Rank #1.

Deckers (DECK - Free Report) has an expected long-term earnings growth rate of 21.5% and a Zacks Rank #2.

Legal Marijuana: An Investor’s Dream

Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.
Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.

Download Marijuana Moneymakers FREE >>