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Zumiez (ZUMZ) Moves 6.2% Higher: Will This Strength Last?

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Zumiez (ZUMZ - Free Report) shares soared 6.2% in the last trading session to close at $47.30. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 2.2% loss over the past four weeks.

Shares of Zumiez got a boost following the company’s sturdy first-quarter fiscal 2021 results. Both the top and the bottom line outshone the Zacks Consensus Estimate and also improved on a year-over-year basis. Markedly, quarterly results exceeded the pre-COVID levels even though part of the company’s global store fleet was closed in the first quarter. Also, comparable store sales were robust in the quarter.

The company delivered earnings per share of $1.03 that surpassed the Zacks Consensus Estimate of $0.01. The bottom line also reversed the loss of $0.84 a share reported in the comparable quarter of the last fiscal year and further increased significantly from $0.03 recorded in the first quarter of fiscal 2019. Higher net sales along with efficient expense management supported bottom-line growth.

In the reported quarter, net sales of $279.1 million soared 102.6% year over year and also outperformed the Zacks Consensus Estimate of $216 million. Also, the metric improved 31.1% from the first quarter of fiscal 2019. Region-wise, North America net sales surged 113.4% year over year while other International net sales, consisting of Europe and Australia, increased 43.2% in the fiscal first quarter.

Management remains impressed with the start to fiscal 2021 and expects the momentum to continue over the rest of the fiscal year. With respect to fiscal 2021 revenues, management had earlier projected to exceed the 2019 revenue levels. Based on strong first-quarter results and May sales, the company now envisions fiscal 2021 net sales to increase in the low-to-mid-teen range from the fiscal 2019 reading.

This clothing retailer is expected to post quarterly earnings of $0.61 per share in its upcoming report, which represents a year-over-year change of -39.6%. Revenues are expected to be $244.26 million, down 2.5% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Zumiez, the consensus EPS estimate for the quarter has increased over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on ZUMZ going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>


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