Rocky Brands Or Weyco Group, Which Is The Better Fit Rocky Brands (NASDAQ: RCKY) and Weyco Group (NASDAQ: WEYS) are two shoe manufacturers/retailers seeing strong demand. The two companies reported earnings simultaneously and reported near-identical results save for one minor...

Rocky Brands Or Weyco Group, A Better Fit Or A Better Buy?

Rocky Brands (NASDAQ: RCKY) and Weyco Group (NASDAQ: WEYS) are two shoe manufacturers/retailers seeing strong demand. The two companies reported earnings simultaneously and reported near-identical results, save for one minor detail. That detail is supply chain challenges, challenges they are both facing but to a different degree. Where Weyco Group says those challenges are dissipating and business is robust, Rocky Brands is saying the opposite. Plans to move distribution centers for some of its key brands met with difficulty and are cutting deeply into the near-term results. What this leaves us with is one stock that appears to be a much more comfortable fit for income portfolios while the other appears to be a much better buy.

Weyco Group Has Good Quarter

Weyco Group had a good quarter in which revenue surged 16.2% over last year and nearly 23% over 2019. There are no analysts covering the stock so there is no comp to make other than, another positive for the stock. While the company says supply chain challenges are present, pressure has been easing and margins continue to be profitable. The company reported $0.52 in GAAP earnings marking the 3rd quarter of earnings growth and 225% growth over the past year. On a segment basis, the company reports double-digit growth in both the retail and wholesale channels with retail up 49% YOY and eCommerce up 33%.

The best news, however, is in terms of the outlook. While the company sees supply chain headwinds persisting into the current quarter and possibly beyond those headwinds are dissipating.

"We are excited about the trajectory of our business, as we are seeing strong demand across all of our brands," stated Thomas W. Florsheim, Jr., Chairman, and CEO. "Our wholesale business posted solid results for the third quarter despite being challenged by supply chain delays, and our retail segment achieved record sales and earnings, largely driven by e-commerce growth. So far in the fourth quarter, we've seen a vast improvement in the flow of our products into the U.S., which will enable us to fulfill much of the increased demand through the end of the year and into 2022."

Rocky Brands Quarter Hit By Supply Chain Woes

Rocky Brands had a great quarter as well but there is a problem. There are analysts covering this stock and the comp to consensus isn't pretty. The company reported $125.51 million on consolidated revenue for a gain of 61% over last year and 86% over 2019 but missed the consensus by a very wide margin. The revenue missed consensus by 2000 basis points and the reason is simple. Supply chain headwinds tied to the global supply chain hangup and the company's decision to relocate product shipping centers. That's not good news. Worse, the company sees these headwinds persisting into the current quarter at least and that has investors running scared.

Jason Brooks, Chairman, President, and Chief Executive Officer. "After moving the recently acquired Boston Group's* inventory to our Ohio distribution center in mid-August, and receiving record inbound supply in preparation for a strong finish to the year, we encountered unanticipated fulfillment challenges that are temporarily hindering our ability to deliver a portion of orders on time. We are making good progress towards regaining the full efficiency of our Ohio distribution center, which along with our new distribution center in Reno, Nevada that went live in early October, has improved our shipping capacity ahead of the holiday season."

Rocky Brands Or Weyco? Comfort Or Value?

When it comes to investing in these stocks it is clear that business is goods. In terms of which stock is a more comfortable investment, we are leaning towards Weyco Group. The stock appears to be well-supported by the market, earnings are on the rise, and the 4.2% dividend yield seems safe enough. When it comes to which stock is a better buy, we are leaning toward Rocky Brands. This stock was yielding a much-less 1.1% but now, following the 15% implosion in share prices, is offering a deep-value relative to Weyco Group. Assuming the company's supply chain issues can be resolved sooner rather than later, we see upside risk in the outlook and a chance for this stock to make a recovery early in 2022. Technically speaking, the stock is down 15% in after-hours trading but still above the key support of $45.