Steven Madden: A Staple For Women's Shoes, Trading Below Intrinsic Value

Nov. 05, 2022 4:27 AM ETSteven Madden, Ltd. (SHOO)
ThinkValue profile picture
ThinkValue
183 Followers

Summary

  • Operating margins are the key indicator to monitor for the stock. The valuation relies on their recovery.
  • Even with a low, single-digit revenue growth in the future, the stock seems to be 24% undervalued.
  • Inflation may drive the stock down in the near term, which can be used by investors to accumulate a long position.
  • Madden is returning capital to investors and a value creating stock with an adjusted payout of 10.7%, and a ROIC of 15%, above the 9.6% cost of capital.
  • The online direct-to-consumer strategy is a key vertical that can unlock value.

Young women in the shopping mall

martin-dm/E+ via Getty Images

Steven Madden (NASDAQ:SHOO) primarily sells standard-tier women's shoes that offer customers similar designs to premium brands such as Versace. Madden caters to a specific demographic that wants to look expensive without paying a brand premium. As such, the

My intrinsic value estimate for Steven Madden

My intrinsic value estimate for

Steven Madden's trailing twelve month profit margins

Steven Madden's trailing twelve month profit margins (Author image with data from FMP)

Future performance model for Steven Madden

Future performance model for Steven Madden (Author image with data from FMP)

Valuation table for Steven Madden

Valuation table for Steven Madden (Author image with data from FMP)

This article was written by

ThinkValue profile picture
183 Followers
Equity research with an emphasis on intrinsic value. We prioritize undervalued and growing companies, preferably in the early stages of their development. We have an internal wishlist - message us a ticker or write it in comment sections.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such 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.

Recommended For You

Comments

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.