Investment Alert: Buy Weyco (WEYS) Under $26/share
Disclaimer: Investment Alerts have a medium to long-term time horizon. These do not constitute financial advice and you should contact a financial advisor before deciding whether it is appropriate for your individual circumstances.
Weyco Group is a footwear company that designs, markets, and distributes footwear for men, women, and children under the Florsheim, Nunn Bush, Stacy Adams, BOGS, Rafters, and Forsake brands. It sells its products to approximately 10,000 footwear, department, and specialty stores, as well as e-commerce retailers in the United States and Canada. What brought the company to our attention was a phenomenal fundamental story, compelling valuation and attractive dividend.
- Weyco has a Perfect Piotroski Score, 9, and is significantly undervalued.
- It is trading at a low P/E ratio relative to earnings growth.
- The company currently offers an attractive dividend just shy of 4%.
The Hidden Tailwind Supporting Weyco
As the growing elderly US population ages, the demand for comfortable footwear has increased. Weyco owns a number of well-known and respected footwear brands, including Florsheim, Nunn Bush, Stacy Adams, and BOGS that have a long history of quality and craftsmanship, and are well-positioned to capitalize on the growing demand for premium footwear.
We peeled back the covers on the Weyco financials and performed a full discounted cash flow forecast analysis, which revealed fair value for the stock at $36 per share, a full 40.6% higher than where the share price currently sits.
Not only that but the company is currently trading at a low P/E ratio of 7.3x relative to future forecasted earnings growth. Weyco is trading at a discount to its peers, which suggests that the market is underestimating its value. This offers investors an opportunity to buy the stock at a bargain price.
In addition, Weyco is paying dividend investors 3.94% while they wait for buyers to uncover the compelling valuation story.
How High Will Weyco Go?
Over the last couple of years, sales have grown by 37.0% and 31.4% while analysts forecast earnings per share will increase from $4.44 to $7.16 between 2023 and 2027.
If those estimates are realized, Weyco is trading at just 3.5x 2027 earnings, a real bargain. Whether the stock will rally to realize its valuation remains to be seen but for those who like a valuation bargain on a stock that has attractive growth forecasts, Weyco looks very interesting.