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Rocky Brands, Inc. (RCKY - Free Report) has done a fantastic job of eliminating costs to boost its bottom line further than anyone expected.

Estimates are rising, and have been for a while, driving share to a Zacks #1 Rank (Strong Buy).

Company Description

Rocky Brands, Inc. makes footwear and apparel under several brand names including Rocky, Durango and licenses brands like Michelin. Styles range from western to work boots.

Big Surprise

On Jul 26 saw a nice spike in net income despite more outstanding shares than last year. The bottom line grew $1.8 million, to $2.3 million. EPS was $0.30 up from just $0.08 a year ago after more than 900,000 additional shares were available.

Sales for the period were off slightly, at $52.3 million versus $55.2 million, but big improvements in operating efficiencies led to the better than expected earnings. Analysts polled by Zacks were expecting EPS to be $0.20, giving Rocky Brands its eighth consecutive surprise.

Rising Estimates

Analysts raised full-year projections for both this year and 2012. The 2011 Zacks Consensus Estimate is up a dime, to account for the surprise, putting the expected growth rate at 24%.

Estimates for 2012 are also up a dime, to $1.71, giving Rocky Brands a 12% expected growth rate. Thanks to the rising estimates and sell off, the valuations have gotten pretty enticing.

The forward P/E is at just 7 times and the PEG is at 0.7. Shares are going for 0.33 times sales and just under book value.

Zoom Out

While it would be nice to see top-line growth driving earnings rather than margin improvement, but it is hard to argue with the earnings outlook. Earnings have been climbing steadily both year over year and throughout each year. That is a hard trend to ignore.

Rocky Brands, Inc.  - ticker RCKY>

Bill Wilton is the Aggressive Growth Stock Strategist for He is also the Editor in charge of the Zacks Small Cap Trader service

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