Oxford Industries, Inc.
by Todd BuntonJune 23, 2011 | Comments : 0 Recommended this article: (0)
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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.
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