SHOO: Margin Recovery And Inventory Discipline Will Support Future Earnings Power

Analysts have nudged their average price target on Steven Madden modestly higher to $43, citing a series of upgrades and target raises into the low to mid $40s as they gain confidence in margin recovery, faster inventory turns, and the company's longer term earnings power.

Analyst Commentary

Bullish analysts highlight that the recent wave of upgrades and target increases reflects growing conviction that Steven Madden is in the early stages of a multi year earnings recovery, supported by improving profitability metrics and operational execution.

Given the stock is still trading at what they view as a discounted multiple on 2026 estimates, they argue that the current valuation does not fully capture the company’s normalized earnings power or the benefits of recent strategic initiatives.

Bullish Takeaways

• Bullish analysts see the move to higher price targets in the low to mid $40s as consistent with a view that the stock is undervalued relative to its potential to deliver more than $4 in earnings power over time.
• Improving margin trajectory, including expectations for EBIT margins to recover from around 6 percent toward an 11 to 12 percent range, is cited as a key driver of upside to current profit forecasts.
• Faster inventory turns and tighter cost discipline are viewed as evidence of stronger execution, which should support more stable earnings and justify a higher earnings multiple.
• The continued integration and margin expansion opportunity at acquired brands, such as moving Kurt Geiger toward mid teens margins, is seen as an incremental growth lever that is not fully reflected in current valuation.

Bearish Takeaways

• More cautious analysts point to the stock’s rebound from its lows and note that near term upside could be limited if macro headwinds pressure discretionary spending or delay the expected margin recovery.
• There is concern that the path back to double digit EBIT margins may take longer than modeled if input costs, tariffs, or promotional intensity remain elevated, which would challenge the more optimistic earnings scenarios.
• Some view the reliance on multiple expansion as a key component of the bull case, warning that any disappointment versus 2026 estimates could compress the current mid teens earnings multiple.
• Execution risk around integrating and scaling acquired brands, while a source of potential upside, is also seen as a variable that could weigh on profitability if synergies do not materialize as planned.

What's in the News

• Issued fourth quarter 2025 guidance calling for revenue growth of 27 percent to 30 percent year over year and GAAP diluted EPS of $0.30 to $0.35, indicating a sharp acceleration compared with 2024. (Corporate Guidance)
• Reported no share repurchases in the July 1 to September 30, 2025 tranche, and confirmed completion of the long running buyback program launched in 2005, retiring 37,152,860 shares for $1,290.53 million in total. (Buyback Tranche Update)
• Total repurchased shares under the completed authorization represent 42.05 percent of the company’s outstanding share base over the life of the program, reducing share count and increasing per share earnings. (Buyback Tranche Update)

Valuation Changes

• Fair Value: Unchanged at $43.75 per share, indicating no adjustment to the modeled intrinsic value.
• Discount Rate: Fallen slightly from 9.11 percent to approximately 9.08 percent, reflecting a modestly lower perceived risk profile.
• Revenue Growth: Effectively unchanged at about 11.25 percent, signaling stable long term top line growth expectations.
• Net Profit Margin: Stable at roughly 11.15 percent, with no meaningful revision to long run profitability assumptions.
• Future P/E: Edged down marginally from 11.44x to about 11.43x, suggesting a slightly lower valuation multiple applied to forward earnings.