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Zumiez Gains on Solid Earnings & Comps Trend: Time to Buy?
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Zumiez Inc. (ZUMZ - Free Report) has been doing well of late owing to its solid earnings surprise history, recent revival of comparable sales (comps) trend, impressive growth strategies and financial strength. The company has surged 64.7% year to date and recorded nearly 50% growth in the last three months. Further, the stock is substantially outperforming the Zacks categorized Retail-Apparel/Shoe industry that has recorded a year-to-date decline of 3.8% and growth of 2.8% in the three-month period, respectively.
Closing trade at $24.90 on Dec 6, 2016, the company’s share price is hovering close to its 52-week high mark of $25.60.
What’s Working Well for the Stock?
Zumiez posted strong results for third-quarter fiscal 2016, wherein both the top and bottom line grew year over year and topped estimates. This marked the company’s fifth consecutive positive earnings surprise. While the bottom-line benefitted from a robust top-line and efficient cost management, sales were fuelled by solid comps and store additions, which also included stores of the recently acquired Fast Times. In the trailing four quarters, the company has recorded an average beat of 30.9%.
Coming to the company’s comps trend, September marked a turnaround from its 17-month long dismal comps trend, which can primarily be attributed to slow mall traffic and the absence of defined fashion trends. Further, the company reported a 10.2% increase in October comps and a 4% comps growth in the fiscal third quarter. Quarterly comps benefited from a robust back-to-school selling season, which improved results in September. In fact, the momentum has continued into November as well, as reflected by Zumiez’s monthly sales results. Comps for November jumped 5.7%, compared with a 13.8% plunge recorded in the year-ago period.
Moreover, the company’s strategic initiatives focused on omni-channel growth, authentic lifestyle positioning and commitment to customer service, position it well for gaining market share. Additionally, the company keeps committed to the strategy of optimizing its store base through expansion in the underpenetrated markets, by either repositioning or closing underperforming stores through constant evaluation, aimed at maximizing long-term productivity.
Additionally, the company is striving to expand its eCommerce and omni-channel platforms to provide consumers with the facility of quick and easy access to its products and brands. We believe that the company’s well-balanced store expansion and eCommerce strategies are likely to drive top-line growth.
Last but not the least, the company enjoys immense financial strength as evident from its ability to generate solid cash flows, which aids in the execution of long-term strategies as well as its store growth plans. The company generated nearly $4 million in operating cash flows in the first three quarters of fiscal 2016.
Further, Zumiez’s commitment to shareholders is clear from its practice of returning them excess cash via share buybacks. In third-quarter fiscal 2016, the company bought back 136,000 shares for $2.3 million that took its year-to-date share buybacks to $20.5 million. As of the end of the third quarter, the company had shares worth $33.9 million remaining under its standing authorization.
We believe the aforementioned strategic actions along with its solid earnings trend position Zumiez for further growth. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Stocks to Consider
Some other similarly-ranked stocks in the retail sector include The Children’s Place Inc. (PLCE - Free Report) and Tillys Inc. (TLYS - Free Report) , both sporting a Zacks Rank #1, and Nordstrom Inc. (JWN - Free Report) , which carries a Zacks Rank #2 (Buy).
Children’s Place, with a long-term earnings growth rate of 10.3%, has surged a whopping 93.3% year to date.
Tillys has gained a solid 119.5% year to date. Moreover, it has a long-term earnings growth rate of 15.5%.
Nordstrom has jumped 15% year to date. The stock has a long-term earnings growth rate of 9.7%.
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Zumiez Gains on Solid Earnings & Comps Trend: Time to Buy?
Zumiez Inc. (ZUMZ - Free Report) has been doing well of late owing to its solid earnings surprise history, recent revival of comparable sales (comps) trend, impressive growth strategies and financial strength. The company has surged 64.7% year to date and recorded nearly 50% growth in the last three months. Further, the stock is substantially outperforming the Zacks categorized Retail-Apparel/Shoe industry that has recorded a year-to-date decline of 3.8% and growth of 2.8% in the three-month period, respectively.
Closing trade at $24.90 on Dec 6, 2016, the company’s share price is hovering close to its 52-week high mark of $25.60.
What’s Working Well for the Stock?
Zumiez posted strong results for third-quarter fiscal 2016, wherein both the top and bottom line grew year over year and topped estimates. This marked the company’s fifth consecutive positive earnings surprise. While the bottom-line benefitted from a robust top-line and efficient cost management, sales were fuelled by solid comps and store additions, which also included stores of the recently acquired Fast Times. In the trailing four quarters, the company has recorded an average beat of 30.9%.
ZUMIEZ INC Price, Consensus and EPS Surprise
ZUMIEZ INC Price, Consensus and EPS Surprise | ZUMIEZ INC Quote
Coming to the company’s comps trend, September marked a turnaround from its 17-month long dismal comps trend, which can primarily be attributed to slow mall traffic and the absence of defined fashion trends. Further, the company reported a 10.2% increase in October comps and a 4% comps growth in the fiscal third quarter. Quarterly comps benefited from a robust back-to-school selling season, which improved results in September. In fact, the momentum has continued into November as well, as reflected by Zumiez’s monthly sales results. Comps for November jumped 5.7%, compared with a 13.8% plunge recorded in the year-ago period.
Moreover, the company’s strategic initiatives focused on omni-channel growth, authentic lifestyle positioning and commitment to customer service, position it well for gaining market share. Additionally, the company keeps committed to the strategy of optimizing its store base through expansion in the underpenetrated markets, by either repositioning or closing underperforming stores through constant evaluation, aimed at maximizing long-term productivity.
Additionally, the company is striving to expand its eCommerce and omni-channel platforms to provide consumers with the facility of quick and easy access to its products and brands. We believe that the company’s well-balanced store expansion and eCommerce strategies are likely to drive top-line growth.
Last but not the least, the company enjoys immense financial strength as evident from its ability to generate solid cash flows, which aids in the execution of long-term strategies as well as its store growth plans. The company generated nearly $4 million in operating cash flows in the first three quarters of fiscal 2016.
Further, Zumiez’s commitment to shareholders is clear from its practice of returning them excess cash via share buybacks. In third-quarter fiscal 2016, the company bought back 136,000 shares for $2.3 million that took its year-to-date share buybacks to $20.5 million. As of the end of the third quarter, the company had shares worth $33.9 million remaining under its standing authorization.
We believe the aforementioned strategic actions along with its solid earnings trend position Zumiez for further growth. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Stocks to Consider
Some other similarly-ranked stocks in the retail sector include The Children’s Place Inc. (PLCE - Free Report) and Tillys Inc. (TLYS - Free Report) , both sporting a Zacks Rank #1, and Nordstrom Inc. (JWN - Free Report) , which carries a Zacks Rank #2 (Buy).
Children’s Place, with a long-term earnings growth rate of 10.3%, has surged a whopping 93.3% year to date.
Tillys has gained a solid 119.5% year to date. Moreover, it has a long-term earnings growth rate of 15.5%.
Nordstrom has jumped 15% year to date. The stock has a long-term earnings growth rate of 9.7%.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>