Oxford Industries, Inc. (OXM - Snapshot Report) recently reported stellar first quarter results on strong revenue growth and expanding margins.
Management raised its sales and earnings guidance for 2011 following the solid quarter. Moreover, analysts unanimously revised their estimates higher for both 2011 and 2012, sending the stock to a Zacks #1 Rank (Strong Buy).
Oxford also pays a dividend that yields 1.6% and shares appear to be reasonably priced.
Oxford Industries, Inc. is an apparel company with a portfolio of owned and licensed brands. Its main brand is Tommy Bahama®, but Oxford also holds licenses to produce and sell certain product categories under the Kenneth Cole®, Geoffrey Beene® and Dockers® labels.
The company is headquartered in Atlanta, Georgia and has a market cap of $531 million.
First Quarter Results
On June 7, Oxford reported first quarter earnings per share came of $1.07, beating the Zacks Consensus Estimate by 7 cents.
First quarter sales were up 27.3% year-over-year to $208.3 million. Excluding the Lilly Pulitzer acquisition, sales rose 9.1%. The Tommy Bahama division, which accounted for 59% of total sales in the quarter, reported a solid 12.6% increase in sales due to strong same-store sales growth.
Overall gross profit expanded from 54.8% of sales to 56.5% in the first quarter due to a favorable product mix. Operating income surged 105.1% as the company leveraged its selling, general and administrative expenses.
Oxford's operating margin improved from 9.1% to 14.7% in the quarter.
Management raised its sales and earnings guidance for 2011 following strong first quarter results. The company now expects to earn between $2.15 and $2.25 per share on sales of $730-$745 million, up from previous guidance of $1.95 to $2.05 and $725-$740 million.
Analysts unanimously raised their estimates for both 2011 and 2012, sending the stock to a Zacks #1 Rank (Strong Buy).
Not only did all analysts revise their estimates in the same direction ("Agreement"), they revised them by a fairly large amount ("Magnitude").
Oxford had a 7 cent EPS beat in the first quarter, but consensus estimates rose 19 cents for 2011 and 14 cents for 2012. This is a bullish signal.
Based on consensus estimates, EPS is expected to grow a whopping 77% in 2011 and 21% in 2012.
Oxford pays a dividend that yields 1.6%. The company cut its dividend in half back in 2009 but has raised it twice since then. It currently pays a quarterly dividend of 13 cents per share, compared with 18 cents per share before the cut.
Oxford's payout ratio is a relatively low 27%, so expect more dividend hikes in the future now that the company is on stable footing.
The valuation picture looks very reasonable for OXM. Shares trade at 14.4x 2011 estimates, in-line with the industry average. Its sports a PEG ratio of 1.1.
With analysts unanimously raising estimates after a strong first quarter, the Agreement and Magnitude components of the Zacks Rank signal a bullish trend. Throw in a dividend yield of 1.6% and reasonable valuation, and Oxford looks like an attractive buy.
Todd Bunton is the Growth & Income Stock Strategist for Zacks.com.