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Bull of the Day: Canada Goose (GOOS)

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Shares of Canada Goose (GOOS - Free Report) have soared over 30% in the last month alone and its recently reported quarterly financial results show signs that the parka power remains headed in the right direction. 

Recent News

Toronto-based Canada Goose sells high-end and high-priced parkas, winter coats, and other cold weather gear. The firm, which reported its fiscal Q2 results on November 14, saw its total quarterly revenues surged 33.7% to reach $230.3 million Canadian dollars.

Meanwhile, the retailer’s adjusted quarterly earnings skyrocketed 59% to 46 Canadian cents per share. Investors should also note that Canada Goose’s wholesale revenues jumped 18%, while direct-to-consumer revenues soared 150%.

Overview

Canada Goose went public in March 2017, but its roots date back to the late 1950s. By the 1980s, the company that would become Canada Goose’s parkas had become a staple in the world of extreme cold, which included expeditions in Antarctica to the summit of Mt. Everest.

Canada Goose began to gain even more traction in the early 2000s when the company’s jackets appeared in two Hollywood blockbusters: The Day After Tomorrow and National Treasure. Since then, the company has remained a mainstay on film sets and expeditions, while expanding into cold weather cities throughout North America.

Investors should note that Canada Goose didn’t even open it first two flagships stores, in Toronto and New York City, until 2016. The company currently boasts 11 stores, with locations in Boston, Chicago, New Jersey, Montréal, Vancouver, Calgary, London, Hong Kong, and Tokyo—the company plans to open a Beijing location soon.

Canada Goose sells jackets for as much as $1,500, along with sweaters that cost $395. Therefore, the company does not have the more mass-market appeal of a Nike (NKE - Free Report) , Columbia Sportswear (COLM - Free Report) , or even VF Corporation’s (VFC - Free Report) The North Face. Instead, Canada Goose sells “investment apparel” that it is sure will keep customers warm. “People tell me all the time trying on a Canada Goose jacket was the first time that they ever truly felt warm in cold climates,” CEO Dani Reiss told analysts last week.

Price Movement

 

 

GOOS went public $12.78 a share in March 2017. Shares eventually closed up more than 25%, which was at the time the second-biggest IPO debut of 2017 behind only Snapchat parent Snap Inc. (SNAP - Free Report) . Heading into Monday, shares of GOOS had skyrocketed roughly 287% since its IPO, which crushed the S&P 500’s 15% climb and looks stellar compared to its industry’s small decline.

Canada Goose’s stock price climbed last week following its quarterly earnings release. Yet, shares of GOOS closed regular trading Monday down 4.23% to $67.09 per share. This marked a roughly 7% downturn from its recently reached all-time high of $72.27, which possibly sets up a better buying opportunity for investors high on the stock.

Outlook

Moving on, Canada Goose lifted its full-year sales growth guidance to climb at least 30%, which marked a jump from its previously-guided 20% top-line expansion. The company based its new optimism on wholesale revenue growth outlook in the high-single-digits, along with the fact that it opened five new retail stores by the start of its peak winter shopping season.

At the bottom end of the income statement, Canada Goose projects that its adjusted fiscal year net income per share will surge by at least 40%, up from 25% higher guidance at the end of Q1.

Earnings Trends

Now let’s dive a little deeper into Canada Goose’s earnings estimates. Our current Zacks Consensus Estimate is calling for the company’s adjusted current quarter earnings to jump roughly 35%. Better yet, the parka seller’s adjusted fiscal year earnings are projected to soar over 53%.

Plus, we have seen the company's earnings picture turn much more positive for its current year and the following year over the last seven days. The two charts below help us understand just how much better Canada Goose’s earnings picture has become.

 

Bottom Line

Canada Goose is currently a Zacks Rank #1 (Strong Buy) based on its recent earnings estimate revision trends. GOOS also sports an “A” grade for Growth in our Style Scores system.

The company clearly seems to be headed in the right direction through direct-to-consumer expansion, among other initiatives. We should also note that although fashion is often fickle, Canada Goose sells products that are theoretically less susceptible to quick changes in consumer habits since parkas and jackets are essential for millions of people in cold weather climates.

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