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Delta Apparel (DLA) Stock Jumps 7.7%: Will It Continue to Soar?

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Delta Apparel (DLA - Free Report) shares ended the last trading session 7.7% higher at $32.46. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 3.6% loss over the past four weeks.

Shares of Delta Apparel got a boost as the company came out with better-than-expected preliminary sales numbers for the third quarter of fiscal 2021 (ended Jul 3, 2021). Net sales of nearly $118 million indicates an increase of 65% from the prior-year reported figure. The robust performance reflects exceptionally solid revenues of Salt Life Group in all sales channels. Direct-to-consumer sales remained sturdy in particular, with sales up more than 150% from the third quarter of fiscal 2019. Favorable demand from retail license and brand direct customers was also an upside.

During the quarter, the company saw gross margin expansion of more than 200 basis points, on the back of improved mix and reduced product costs. Management expects solid sales, elevated gross margin and lower general and administrative expenses to result in earnings per share of more than 90 cents for the third quarter of fiscal 2021.

This maker of branded and private-label apparel is expected to post quarterly earnings of $0.64 per share in its upcoming report, which represents a year-over-year change of +124.8%. Revenues are expected to be $109.8 million, up 52.9% 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 Delta Apparel, the consensus EPS estimate for the quarter has remained unchanged 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 DLA 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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