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Wolverine (WWW) Q3 Earnings Likely to Rise: Here's Why

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Wolverine World Wide, Inc. (WWW - Free Report) is scheduled to report third-quarter 2018 numbers on Nov 7, before the opening bell. This designer, manufacturer and retailer of footwear, apparel and accessories boasts an impressive bottom-line performance. In the first and second quarter, the company delivered a positive earnings surprise of 35.1% and 20%, respectively.

Also, the company has been progressing well with its GLOBAL GROWTH AGENDA, which focuses on empowering brands through innovation, implementing advanced digital tools and expanding into new markets. However, the company’s top-line performance has been dismal since the past few quarters.

Let’s see what’s in store for Wolverine this time around.

How are Estimates Faring?

The Zacks Consensus Estimate for third-quarter earnings is pegged at 56 cents, reflecting a growth of 30.2% from the year-ago figure. Notably, the consensus mark has been stable over the past 30 days. The Zacks Consensus Estimate for revenues stands at $581.5 million, almost flat with $581.3 million registered in the year-ago period.

Wolverine World Wide, Inc. Price, Consensus and EPS Surprise

Well, the obvious question that comes to mind is whether Wolverine will be able to sustain its positive earnings surprise streak in the third quarter of 2018. Though the past trend indicates a positive surprise, it will not be wise to jump to a conclusion without analyzing the factors at play.

Factors Influencing Wolverine’s Performance

Wolverine is on track with its GLOBAL GROWTH AGENDA, which aims at driving growth and profitability amid a competitive market scenario. For 2018, this growth initiative is expected to expand gross margin in a band of 100-130 bps compared with 50-90 bps projected earlier.

In sync with this, the company is trying to enhance its e-commerce business. In fact, Wolverine has been utilizing its digital capabilities to increase speed of information and product flow. The company stated that e-commerce business improved 24% during the first half of 2018. Further, the company plans to allocate close to 30% of its incremental investments in order stay on track with such robust advancements.

Meanwhile, the company has been progressing well on the international front. Notably, Wolverine’s global business network is spread across close to 200 nations and territories, with approximately 15,000 controlled points of distribution. In addition, the company plans to allocate 25% of its incremental investments to fuel growth in international brands. With such well-spun plans rolled up in its sleeves, it plans to achieve a high-single digit growth in revenues from the international business in 2018.

The Zacks Consensus Estimate for third-quarter revenues of Outdoor & Lifestyle Group and Boston Group is pegged at $257 million and $208 million, reflecting an increase of 3.6% and 5.6%, respectively, from the prior-year period. However, the same for Heritage Group stands at $89 million, flat year over year.

What the Zacks Model Unveils

Our proven model does not conclusively show that Wolverine is likely to beat earnings estimates this quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Although Wolverine has a Zacks Rank #3, its Earnings ESP of 0.00% makes surprise prediction difficult.

Stocks With Favorable Combination

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Michael Kors Holdings Limited has an Earnings ESP of +0.64% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ralph Lauren Corporation (RL - Free Report) has an Earnings ESP of +0.31% and a Zacks Rank #2.

NIKE, Inc. (NKE - Free Report) has an Earnings ESP of +0.86% and a Zacks Rank #3.

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