Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 stocks made the list for top value stocks in the Footwear industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Footwear Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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3 Undervalued Footwear Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 3 undervalued stocks in the Footwear industry for Monday, June 24, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Footwear industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Allbirds Inc’s Value Grade

Value Grade:

Allbirds, Inc. is a global lifestyle brand, which uses sustainable materials to make footwear and apparel products. The Company offers different products across its footwear and apparel categories, including lifestyle and performance products. The Company’s products include men's shoes, women's shoes, men's apparel, women's apparel, and socks. It offers various categories of shoes, including everyday sneakers, active shoes, water-repellent shoes, slip-ons, hiking shoes and high tops. It provides various categories of men’s apparel, including socks, underwear, tees, sweatshirts and sweatpants, hats, insoles and lace kits. Its women's apparel includes socks, underwear, tees and sweats and pajamas. Its core franchises include lifestyle and performance shoes, such as the Dasher and the Runner. Its physical retail channel consists of approximately 60 Company-operated stores spread across seven countries, with the majority in the United States.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Allbirds Inc has a Value Score of 79, which is considered to be undervalued.

When you look at Allbirds Inc’s price-to-sales ratio at 0.36 compared to the industry median at 1.43, this company has a lower price relative to revenue compared to its peers. This could make Allbirds Inc’s stock more attractive for value investors.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Allbirds Inc’s shareholder yield is lower than its industry median ratio of 2.06%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Allbirds Inc’s price-to-book ratio is lower than its industry median ratio of 4.02. This could make Allbirds Inc more attractive to investors looking for a new addition to their portfolio.

McRae Industries Inc’s Value Grade

Value Grade:

McRae Industries, Inc. is a manufacturer and distributor of children’s shoes. The Company’s principal lines of business are manufacturing and selling military combat boots, western and work boots. The Company is involved in manufacturing, selling and distributing boot products targeted to the western/lifestyle and work boot markets. The Company also operates other smaller businesses. Its western/lifestyle boot segment, which includes western, ladies’ fashion, and children’s footwear products under the Dan Post, Dingo, Eldorado, and Laredo brand names. Its work boot segment, which consists of Dan Post and Laredo work boots, as well as its military combat boots. McRae Footwear is a wholly owned division of the Company, which manufactures boots for the United States military. The Dingo offers boots and shoes from biker/harness styles to western fashion.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

McRae Industries Inc has a Value Score of 79, which is considered to be undervalued.

McRae Industries Inc’s price-earnings ratio is 13.2 compared to the industry median at 19.1. This means that it has a lower price relative to its earnings compared to its peers. This makes McRae Industries Inc more attractive for value investors.

McRae Industries Inc’s price-to-book ratio is higher than its peers. This could make McRae Industries Inc less attractive for value investors when compared to the industry median at 4.02.

You can read more about McRae Industries Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Weyco Group, Inc.’s Value Grade

Value Grade:

Weyco Group, Inc. designs, markets, and distributes footwear principally for men. The Company is also focused on women and children, under a portfolio of brand names including: Florsheim, Nunn Bush, Stacy Adams, BOGS, Rafters, and Forsake. The Company operates through two segments: North American wholesale (Wholesale) and North American retail (Retail). In the Wholesale segment, its products are sold to footwear, department, and specialty stores, as well as e-commerce retailers, primarily in the United States and Canada. It also has licensing agreements with third parties who sell its branded apparel, accessories, and specialty footwear in the United States, as well as its footwear in Mexico and certain markets overseas. The Retail segment consists of e-commerce businesses and four brick-and-mortar retail stores in the United States. Retail sales are made directly to consumers on its Websites, or by its employees in its stores.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Weyco Group, Inc. has a Value Score of 93, which is considered to be undervalued.

Weyco Group, Inc.’s price-earnings ratio is 9.5 compared to the industry median at 19.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Weyco Group, Inc. more attractive for value investors.

Weyco Group, Inc.’s price-to-book ratio is higher than its peers. This could make Weyco Group, Inc. less attractive for value investors when compared to the industry median at 4.02.

You can read more about Weyco Group, Inc.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Footwear Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Footwear stocks as well as other industrys.

Choosing Which of the 3 Best Footwear Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Allbirds Inc stock has a Value Grade of B.
• McRae Industries Inc stock has a Value Grade of B.
• Weyco Group, Inc. stock has a Value Grade of A.

Now that you have a bit more background about each of the 3 undervalued stocks in the Footwear industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Footwear Stocks

Want to learn more about Footwear stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 3 Undervalued Footwear Stocks for Monday, June 24
• Why On Holding AG’s (ONON) Stock Is Down 4.82%
• Why Wolverine World Wide, Inc.’s (WWW) Stock Is Up 5.70%
• Why Rocky Brands Inc’s (RCKY) Stock Is Up 8.72%

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.