Entering text into the input field will update the search result below

Weyco Group: 2020 Was A Perfect Storm But It's A Buy

Mar. 08, 2021 12:38 PM ETWeyco Group, Inc. (WEYS)6 Comments
Dividend Power profile picture
Dividend Power


  • Weyco Group is a Dividend Champion with 39 years of dividend growth.
  • The stock is currently yielding over 5%, but the dividend is not covered by earnings and free cash flow in the last two quarters.
  • Weyco has a fortress balance sheet with a net cash position allowing it to pay the dividend.
  • The COVID-19 pandemic is having a large adverse effect on sales and earnings.
  • Rising vaccine distribution should mean better times for Weyco in 2021.

Weyco Group (NASDAQ:WEYS) is a stock that I have written positively about in the past. But the stock did not do well in 2020 due to the impact that COVID-19 had on the company's business. This was on top of tariffs and the trade war effects on shoes imported from China. Weyco faced a perfect storm in 2020. Sales were down in by well over -50% in the second quarter and the third quarter was not too much better. That said, rising vaccine distribution in the U.S. and elsewhere portend better times ahead. Weyco's business will likely recover as offices reopen and life returns to a more normal basis, but it will take time. The new administration has not yet moved to remove tariffs on shoes, but it is now a better possibility. For now, though, Weyco is yielding over 5% and importantly the dividend has not yet been cut or suspended thanks to the fortress balance sheet. In addition, Weyco is a Dividend Champion with 39 years of dividend growth. There is still risk here and the dividend could be cut. But unless 2021 is worse than 2020 from the perspective of COVID-19, Weyco should recover. I view Weyco as a buy.

Weyco GroupSource: Weyco Group

Impact of COVID-19 on Weyco Group

The COVID-19 pandemic has impacted business around the world but some more than others. The pandemic is having an outsize impact on Weyco. The company mostly sells business and modern casual men's footwear through department stores, national shoe chain retailers, and its own stores. Obviously, this was not a great business to be in during the COVID-19 pandemic. Sales were punished across all channels and all brands as state and local governments closed malls. Furthermore, many customers that would buy business shoes were working from home as offices were closed or operated at reduced staffing on site. Lastly, men

This article was written by

Dividend Power profile picture
I am a self-taught individual investor and I have been investing in stocks for approximately 20 years. I focus on dividend growth investing with a long-term horizon since I believe in the compounding power of dividend growth investing. I generally look for undervalued large cap stocks with sustainable dividend growth and capital appreciation potential. My second focus is tech and small- or mid-cap stocks with or without dividends for their growth potential. I try to provide a little more in depth analysis weighing the positives and negatives. You can see my performance at my Tip Ranks profile. I am now in the Top 2.5% out of 26,000+ financial bloggers (September 2023).You can follow me at my blog Dividend Power. Read my e-book --> 10 Forever Dividend Growth StocksI also write stock analyses for Sure Dividend as a part-time free lance equity analyst. I provide investment analyses and research for their Sure Analysis Research Database. Additionally, I write stock snapshots and other research for Portfolio Insight.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (6)

It's not overvalued but I struggle with giving it a high multiple given lack of revenue and EPS growth. The FCF of 10% seems about right - I could see the company surviving with current economics another cycle (7-10 years). But if management deploys the cash into buybacks at this level it does seem to be accretive and management should be applauded for doing what they can.

If I were a shareholder i would want to cancel the div and plow the cash into buybacks. But with the family having a big stake, i could see them wanting the money.

Two things to note:
1) The family has been selling in 2021, not a great sign they think things are about to get a lot better. Both Thomas and John are selling.
2) 2020 cash flows were heavily dependent on the drawdown of Net Working Capital and to the extent they have to replenish inventories this will draw capital and reduce cash over the next 12 months. It reduces the potential for other uses of cash.
Dividend Power profile picture
@Buyside Guy, CFA - Not sure why the family is selling but it could be to offset the gain they would have in ownership percentage where WEYS is buying back stock. My general thought is that if WEYS can survive COVID-19 then it can survive most downturns and the yield is safe.
I like under the radar dividend investments. This is certainly one of them. Beating the S&P 500 by 4 percent since you published this article...are you going to initiate a position?
Dividend Power profile picture
@Johnny Wad - I have not although I have written about Weyco extensively. Mostly, because I have other priorities for my investments. But Weyco was a deal at sub-$20 and certainly at sub-$18. It is still a good buy and the yield is solid.
@Dividend Power I like SPTN as well.
Dividend Power profile picture
@Johnny Wad - I have not yet looked at SPTN but will do so.
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.