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Bull of the Day: Columbia Sportswear Company (COLM)

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Columbia Sportswear Company (COLM - Free Report) stock has outperformed the larger apparel market over the last year. The historic outdoor apparel and footwear company is also coming off a strong third quarter and its growth prospects appear impressive. Plus, we are in the midst of the holiday and winter shopping period that could help boost the outdoor-focused firm.

Overview

Columbia, which was founded in 1938, currently sells everything from trail running shoes to winter jackets. The company also owns fellow outdoor and sportswear brands Mountain Hardwear, Sorel, and PrAna. Together, the Columbia family of brands competes against V.F. Corporation’s (VFC - Free Report) The North Face, Canada Goose (GOOS - Free Report) , Nike (NKE - Free Report) , REI, Patagonia, Lululemon (LULU - Free Report) , and others.

Columbia is coming off a better-than-expected quarter that saw its revenues jump 6% to a record $795.8 million, driven by a 9% surge in U.S. sales an 15% expansion in Europe, the Middle East, and Africa. On top of that, the firm’s direct-to-consumer sales surged 23% to reach $251 million. Overall, the company’s namesake brand popped 7% to hit $640.9 million. Going forward, Columbia’s continued collaborations with upstart fashion brands and its ability to capitalize on the current retro trend are likely to help spur growth.

Price Movement

Now that we have covered some of Columbia’s recent performance and overall business, it’s time to dive into its stock price movement to help investors gain a better understanding of what is going on. Colombia, which closed Q3 with 135 U.S. retail locations, has seen its stock price soar roughly 97% over the last three years. This blew away its industry’s 4% climb and S&P 500’s 31% jump.

Year to date, shares of COLM are up 23%, which looks even more impressive considering that the S&P is down 1.5% on the year. Columbia saw its stock price dip marginally Monday to close regular trading at $88 a share, down approximately 8% from its 52-week high of $95.74 per share.


Valuation

COLM stock is currently trading at 21.8X forward 12-month Zacks Consensus EPS estimates, which marks a premium compared to its industry’s 17.8X average. But we already know that Columbia stock has destroyed its industry recently to help justify this forward P/E.

Plus, the chart below helps us see that COLM’s valuation picture is not that stretched at the moment compared to where it has traded over the last five years. Columbia has traded as high as 29.6X during this stretch, with a five year-year median of 22X.

 

Outlook & Earnings Trends

Looking ahead, our current Zacks Consensus Estimate calls for the company’s fourth-quarter revenues to pop 9.6% to reach $850.34 million. Meanwhile, the outdoor apparel firm’s fiscal year revenues are expected to hit $2.74 billion, which would mark a nearly 11% climb from 2017. If we peek ahead to fiscal 2019, Columbia’s full-year revenues are projected to pop 8.2% above our current year estimate.

At the bottom end of the income statement, the company’s adjusted 2018 earnings are projected to surge 21.2% to reach $3.61 per share. On top of that, COLM’s fiscal 2019 EPS figure is expected to jump 13.2% higher than our 2018 projection. Investors should note that Columbia’s Q4 earnings are projected to slip 3% from the year-ago period to $1.27 per share.

Despite, Columbia’s somewhat disappointing Q4 earnings outlook, the company has seen a large amount of upward earnings estimate revisions for both fiscal 2018 and 2019 recently. This helps us understand that at least some analysts are more positive about Columbia’s future earnings growth.

 

Bottom Line

The outdoor apparel power’s growth outlook appears strong as it adapts to the new retail age. Impressively, Columbia doesn’t carry any long-term debt at the moment, which helps provide the 80-year-old firm flexibility and room to improve its business far beyond the holiday shopping period.

Columbia is currently a Zacks Rank #1 (Strong Buy) based, in large part, on its recent earnings estimate revision trends. COLM has also crushed our quarterly earnings estimates in the trailing four periods.

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