Investment Thesis
Wolverine is in financial distress with negative operating cash flow (-$83.2M) and an unsustainable interest coverage ratio of 0.9x, meaning operating income cannot cover debt service. Despite a reasonable 47.6% gross margin, deteriorating net income (-5.1% YoY) combined with high leverage (1.54x D/E) and zero revenue growth signals structural business weakness in a competitive footwear market.
Strengths
- Gross margin of 47.6% demonstrates reasonable product pricing power
- Cash position of $119.6M provides near-term liquidity buffer
- Current ratio of 1.53x indicates adequate working capital for immediate obligations
Risks
- Interest coverage ratio of 0.9x - operating income insufficient to service debt obligations, indicating insolvency risk
- Negative operating cash flow of -$83.2M and negative free cash flow of -$84.9M - company burning cash despite minimal capex
- High leverage with $638.9M debt against $415.7M equity (1.54x D/E ratio) leaves no margin for deterioration
- Flat revenue growth and declining net income signal lost market competitiveness
- Critically weak capital returns (ROE 4.9%, ROA 1.2%) destroying shareholder value
Key Metrics to Watch
- Operating cash flow trend - immediate priority given negative $83.2M
- Interest coverage ratio - monitor debt sustainability
- Revenue growth rate - assess market share and competitive position
- Debt reduction or refinancing announcements
- Gross margin sustainability under cost pressures
Financial Metrics
Revenue
457.6M
Net Income
20.2M
EPS (Diluted)
$0.24
Free Cash Flow
-84.9M
Total Assets
1.6B
Cash
119.6M
Profitability Ratios
Gross Margin
47.6%
Operating Margin
7.4%
Net Margin
4.4%
ROE
4.9%
ROA
1.2%
FCF Margin
-18.6%
Balance Sheet & Liquidity
Current Ratio
1.53x
Quick Ratio
0.89x
Debt/Equity
1.54x
Debt/Assets
0.0%
Interest Coverage
0.91x
Long-term Debt
638.9M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-16T10:42:57.491604 |
Data as of: 2026-04-04 |
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