Weyco Group's 15min chart signals potential reversal with RSI overbought and narrowing Bollinger Bands.

Based on the 15-minute chart of Weyco Group, the RSI has entered an overbought territory and Bollinger Bands are narrowing as of 08/19/2025 at 15:45. This suggests that the stock price has risen too quickly and is now trading at a level that is higher than its fundamental value, with the magnitude of price fluctuations decreasing. This indicates a potential reversal in the trend, as the stock price has reached a point where it is unlikely to continue rising without a correction.

Weyco Group (NASDAQ:WEYS) has seen a rapid rise in its stock price, as indicated by the 15-minute chart showing the Relative Strength Index (RSI) entering overbought territory and Bollinger Bands narrowing as of August 19, 2025, at 15:45. This suggests that the stock price has risen too quickly and is now trading at a level that is higher than its fundamental value, with the magnitude of price fluctuations decreasing. This indicates a potential reversal in the trend, as the stock price has reached a point where it is unlikely to continue rising without a correction.

Weyco Group released its 2Q25 earnings last week, revealing another quarter of revenue and margin deterioration, primarily due to retailer caution. The company remains highly exposed to tariffs in China and India, with 60% of its footwear sourced from China. Tariffs on China are already at 30%, and the company will face further impacts. Despite good returns to shareholders, the stock should be significantly more discounted to offset these risks [1].

The company's revenues were challenged across all brands and channels. Legacy brands like Florsheim and Nunn Bush saw declines of 5% and 10/11% respectively, while the muck boots brand BOGS declined by 14%. The company's wholesale US and retail sales were down by 9% and 11% respectively. Gross margins maintained, with a decrease of only 60 basis points, despite a 10% fall in revenues. However, the company's exposure to tariffs remains massive, and the full impact is likely to be felt in the second half of 2025.

Operating income and net income halved year-over-year, signaling significant risks. The company's adjusted price-to-earnings ratio is not cheap, trading at a market cap of $285 million versus $25 million in TTM net income, which is high at 11.5x. However, the company has $85 million in net cash and no debt, reducing the enterprise value (EV) ratio to about 8x. The company also returns most of its earnings to shareholders, generating $8 million in net income and paying $5 million in dividends and repurchasing $3 million in stock in 1H25.

The company did not provide guidance for the year or the second half. However, based on the current trends, sales are expected to decline significantly, with potential double-digit or mid-teens declines across the board for the year. If 2H25 earnings halve, net income could fall to $13 million, making the stock trade at a high 15x earnings, adjusted for cash.

In conclusion, while Weyco Group has been returning earnings to shareholders, the stock is currently overvalued given the risks it faces from tariffs and the declining secular trend in its core business. The stock should be significantly more discounted to reflect these challenges.

References:
[1] https://seekingalpha.com/article/4813419-weyco-is-exposed-to-tariffs-and-earnings-are-halving-but-the-stock-has-barely-adjusted