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Will Columbia Sportswear's Raised Buyback Plan Fuel Stock?

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Columbia Sportswear Company (COLM - Free Report) remains focused on boosting investors’ sentiments, through strategic growth initiatives as well as shareholder-friendly moves. To this end, the company unveiled the authorization of additional buybacks of up to $200 million. This share repurchase program takes immediate effect.

Well, Columbia Sportswear has been committed toward boosting shareholders’ returns for quite a few years now. Evidently, the company has repurchased more than 3.4 million shares at the cost of $58 per share over the past four years. We note that share repurchases and dividend payments are common among companies with a healthy financial status.

This seems to be the case for Columbia Sportswear, which generated cash flow from operating activities of $99.3 million during the first six months of 2018. During this period, Columbia Sportswear paid dividends worth $30.9 million and repurchased 500,290 shares for nearly $40.1 million. On a year-to-date basis, the company has repurchased 939,560 shares, which includes 398,518 shares since its robust second-quarter 2018 earnings release.

Talking of the second quarter, both the top and bottom lines improved year over year, and came ahead of the Zacks Consensus Estimate. While the top line marked its sixth straight quarter of beat, the bottom line delivered positive surprise for 22 quarters in a row. Sales were backed by solid growth in all geographic regions, product categories and most brands. Management remained impressed with its better-than-expected quarterly performance, wherein direct-to-consumer and wholesale businesses depicted steady growth.  These factors along with improved margins and lower tax rate fueled the bottom line.

Management remains pleased with its sturdy second-quarter performance as well as record results for the first half of 2018. Markedly, Columbia Sportswear’s first-half revenues exceeded $1 billion for the first time ever, courtesy of strength in the company’s Columbia brand. Going ahead, the company plans to continue banking on its four key strategies, which along with expectations of a strong second half encouraged management to raise its outlook for the year. Net sales growth is now expected in the range of 9-10.5% year over year, while adjusted earnings per share for 2018 is now projected in a band of $3.37-$3.47.



Clearly, all these factors have been raising investors’ optimism in this Zacks Rank #2 (Buy) stock that has rallied close to 49% in a year, outpacing the industry’s growth of almost 37%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Coming back to today’s announcement, we believe that the company’s sustained focus on enhancing shareholders’ value is likely to drive its stock further. In fact, apart from Columbia Sportswear, textile-apparel players like lululemon athletics (LULU - Free Report) , Ralph Lauren (RL - Free Report) and PVH Corp. (PVH - Free Report) among others are also known for their shareholder-friendly moves.

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