Steven Madden, Ltd. (SHOO): A Bull Case Theory

We came across a bullish thesis on Steven Madden, Ltd. on Waterboy’s Substack by Waterboy Investing. In this article, we will summarize the bull’s thesis on SHOO. Steven Madden, Ltd.’s share was trading at $23.35 as of June 25th. SHOO’s trailing and forward P/E ratios were 10.06 and 30.67, respectively, according to Yahoo Finance.

A pair of stylish shoes on a modern store shelf, illustrating the companies focus on footwear and accessories.

Steve Madden, Ltd. (SHOO), is a footwear and accessories company known for high returns on capital (15%+), consistent free cash flow ($163 million LTM), and shareholder-friendly capital allocation—buybacks have reduced share count by 22% over the past decade. Despite this, the stock trades at just 8.93x trailing earnings with a 3.52% dividend yield, weighed down by tariff-related concerns. Founded in 1990 by Steve Madden with just $1,100, the company has grown through a nimble “test-and-react” strategy, quickly scaling popular designs across its online platform and 314 stores.

This approach yields industry-leading inventory turns (5.5x) and stable 40% gross margins, well above peers like Crocs, Skechers, and Birkenstock. The brand has maintained strong relevance with fashion-conscious women while avoiding expensive celebrity endorsements, though it still enjoys visibility among stars like Selena Gomez and Lady Gaga. Under CEO Ed Rosenfeld, a former retail investment banker, the company has exercised disciplined capital allocation, amassing $1.5 billion in treasury stock and delivering a 117% EPS increase over 10 years.

Recently, SHOO made its largest acquisition ever: UK-based Kurt Geiger for $384 million, financed through a $300 million term loan. Geiger’s $530 million in revenue and estimated 8–10% margins make it an attractive deal at ~8x EBIT. With SHOO founder Madden nearing retirement and the stock undervalued relative to peers—especially after 3G Capital acquired Skechers at 15x earnings—the company itself may be a potential acquisition target, offering a compelling upside opportunity for investors.

Previously, we covered a bullish thesis on Birkenstock Holding plc (BIRK) by Bulls On Parade in February 2025, which highlighted the company’s strong expansion in Asia, improving manufacturing efficiency, and premium brand positioning. The company’s stock price has depreciated by approximately 4% since our coverage. This is because the thesis hasn’t fully played out yet. Waterboy Investing shares a similar view on Steven Madden, Ltd., but emphasizes disciplined capital allocation and acquisition potential.

SHOO isn’t on our list of the 30 Most Popular Stocks Among Hedge Funds. While we acknowledge the risk and potential of SHOO as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SHOO and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.