A month has gone by since the last earnings report for Iconix Brand Group, Inc. . Shares have lost about 17.9% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Iconix Tops Fourth Quarter Earnings, Weak Sales
Iconix Brand reported mixed fourth-quarter 2016 results. While earnings beat the Zacks Consensus Estimate, revenues lagged the same.
Quarter in Detail
Iconix reported fourth-quarter adjusted earnings of $0.38 per share, which beat the Zacks Consensus Estimate of $0.15 by 153.3%. Earnings grew approximately 52.0% from the year-ago period, mainly due to higher operating income and improved margins.
Total licensing revenues of $87.1 million lagged the Zacks Consensus Estimate of $89.0 million by 2.13% and also declined 8% from the year-ago quarter. In the fourth-quarter 2016, the company benefited from foreign currency exchange rates which were primarily related to the Yen. Also, revenues in the prior-year's fourth quarter included approximately $1.3 million of licensing revenues from the Badgley Mischka brand, which was sold in first-quarter 2016. Excluding Badgley Mischka and the currency impact, revenues were down approximately 7% for the quarter.
Both Candies brand at Kohl's stores and the Bongo brand at Sears posted weak sales in the quarter. In the fourth quarter, royalties were also negatively impacted by Danskin Now's tiered royalty structure, which hit a lower royalty rate earlier this year when compared to the earlier figure, driven by higher overall Danskin Now sales of Walmart.
While the Home and International category witnessed growth, Womens, Mens and Entertainment segments declined on a year-over-year basis. The Entertainment segment was down 20% in the reported quarter. Home segment increased 9%, backed by strong partnerships including Royal Velvet at JCPenney, Charisma at Costco and Fieldcrest at Target International category grew 28% driven by new deals in key markets such as China, Southeast Asia and Brazil. On the other hand, Women’s declined 17% and Men’s fell 10%.
Adjusted operating income (excludes the impact of the impairment charges related to certain of the company's trademarks and goodwill) grew 46% to $57.4 million in the quarter primarily related to the gain related to the Sharper Image brand divestiture. Operating margin increased 240 basis points to 66%, driven by the men's segment.
Full-Year 2016 Results
In 2016, Iconix posted adjusted earnings of $1.37 per share, which beat the Zacks Consensus Estimate of $1.11 by 23.42%. Earnings grew 3.01% from the year-ago period.
Total licensing revenues of $368.5 million lagged the Zacks Consensus Estimate of $370.0 million by 0.41% and also declined 3% from the year-ago period.
Other Financial Update
The company ended the year with $326.7 million total cash (including restricted cash of approximately $177.3 million) and $1.3 billion face value of debt. In 2016, the company generated approximately $250.8 million of free cash flow, a 24% increase as compared to approximately $202.4 million in 2015.
2017 Guidance Provided
Iconix expects full-year licensing revenues in the range of $350−$365 million. This compares to revenue of approximately $359 million in 2016, which excludes revenue from the Sharper Image brand.
The company expects full-year adjusted EPS guidance in the range of $0.70−$0.85 per share, compared with $0.78 in 2016, when excluding gains from the sale of the Sharper Image and Badgley Mischka brands.
For the full year, the company expects free cash flow in a range of $105−$125 million for the year.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
VGM Scores
At this time, Iconix's stock has a nice Growth Score of 'B', however its Momentum is lagging a bit with an 'C'. Charting a somewhat similar path, the stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value and growth investors than momentum investors.
Outlook
The stock has a Zacks Rank #4 (Sell). We are expecting a below average return from the stock in the next few months.
Image: Bigstock
Why Is Iconix (ICON) Down 17.9% Since the Last Earnings Report?
A month has gone by since the last earnings report for Iconix Brand Group, Inc. . Shares have lost about 17.9% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Iconix Tops Fourth Quarter Earnings, Weak Sales
Iconix Brand reported mixed fourth-quarter 2016 results. While earnings beat the Zacks Consensus Estimate, revenues lagged the same.
Quarter in Detail
Iconix reported fourth-quarter adjusted earnings of $0.38 per share, which beat the Zacks Consensus Estimate of $0.15 by 153.3%. Earnings grew approximately 52.0% from the year-ago period, mainly due to higher operating income and improved margins.
Total licensing revenues of $87.1 million lagged the Zacks Consensus Estimate of $89.0 million by 2.13% and also declined 8% from the year-ago quarter. In the fourth-quarter 2016, the company benefited from foreign currency exchange rates which were primarily related to the Yen. Also, revenues in the prior-year's fourth quarter included approximately $1.3 million of licensing revenues from the Badgley Mischka brand, which was sold in first-quarter 2016. Excluding Badgley Mischka and the currency impact, revenues were down approximately 7% for the quarter.
Both Candies brand at Kohl's stores and the Bongo brand at Sears posted weak sales in the quarter. In the fourth quarter, royalties were also negatively impacted by Danskin Now's tiered royalty structure, which hit a lower royalty rate earlier this year when compared to the earlier figure, driven by higher overall Danskin Now sales of Walmart.
While the Home and International category witnessed growth, Womens, Mens and Entertainment segments declined on a year-over-year basis. The Entertainment segment was down 20% in the reported quarter. Home segment increased 9%, backed by strong partnerships including Royal Velvet at JCPenney, Charisma at Costco and Fieldcrest at Target International category grew 28% driven by new deals in key markets such as China, Southeast Asia and Brazil. On the other hand, Women’s declined 17% and Men’s fell 10%.
Adjusted operating income (excludes the impact of the impairment charges related to certain of the company's trademarks and goodwill) grew 46% to $57.4 million in the quarter primarily related to the gain related to the Sharper Image brand divestiture. Operating margin increased 240 basis points to 66%, driven by the men's segment.
Full-Year 2016 Results
In 2016, Iconix posted adjusted earnings of $1.37 per share, which beat the Zacks Consensus Estimate of $1.11 by 23.42%. Earnings grew 3.01% from the year-ago period.
Total licensing revenues of $368.5 million lagged the Zacks Consensus Estimate of $370.0 million by 0.41% and also declined 3% from the year-ago period.
Other Financial Update
The company ended the year with $326.7 million total cash (including restricted cash of approximately $177.3 million) and $1.3 billion face value of debt. In 2016, the company generated approximately $250.8 million of free cash flow, a 24% increase as compared to approximately $202.4 million in 2015.
2017 Guidance Provided
Iconix expects full-year licensing revenues in the range of $350−$365 million. This compares to revenue of approximately $359 million in 2016, which excludes revenue from the Sharper Image brand.
The company expects full-year adjusted EPS guidance in the range of $0.70−$0.85 per share, compared with $0.78 in 2016, when excluding gains from the sale of the Sharper Image and Badgley Mischka brands.
For the full year, the company expects free cash flow in a range of $105−$125 million for the year.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Iconix Brand Group, Inc. Price and Consensus
Iconix Brand Group, Inc. Price and Consensus | Iconix Brand Group, Inc. Quote
VGM Scores
At this time, Iconix's stock has a nice Growth Score of 'B', however its Momentum is lagging a bit with an 'C'. Charting a somewhat similar path, the stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value and growth investors than momentum investors.
Outlook
The stock has a Zacks Rank #4 (Sell). We are expecting a below average return from the stock in the next few months.