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Zumiez Up 25% in 3 Months on Solid Comps & Growth Efforts

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Zumiez Inc. (ZUMZ - Free Report) is gaining momentum on the back of robust comparable store sales (comps), expansion of e-commerce and omni-channel platform, integration of sales channels and other strategic initiatives. Also, the company is on track with store remodeling and openings.

Also, a glance at this stock’s price performance shows that it has outperformed the industry in the past three months. Shares of this Lynnwood, WA-based company have rallied more than 25% compared with the industry’s 5.9% growth.



Let’s delve deeper to find out the factors driving this Zacks Rank #2 (Buy) stock’s performance, which also flaunts a VGM Score of A.

Factors Behind Zumiez’ Bullish Run

Zumiez has been benefiting from favorable comps trend, which has been steadily rising over the trailing 10 quarters. During fourth-quarter fiscal 2018, comps grew 3.9% driven by higher transaction volume and growth in dollars per transaction. Strength in the men’s, women’s, hard goods and footwear categories aided the quarterly performance. Notably, in fiscal 2018, comps improved 5.6%. For fiscal 2019, the company projects comps to rise in low-single digit.

These apart, the company’s focus on providing differentiated assortments is impressive. Zumiez has invested heavily to boost localized merchandising assortments. Additionally, the implementation of advanced technology has helped it improve customers’ shopping experience across diverse channels. The company is enhancing its competitiveness by making strategic investments in logistics, planning and allocation along with omni-channel capabilities, which positions it well for growth. Management is also on track with its efforts to manage costs across different verticals.

In a bid to provide consumers with quick and easy access to its products and brands, the company is striving to expand its e-commerce and omni-channel platforms. In this regard, Zumiez has considerably improved customers’ experience by integrating its physical and digital networks. This allows customers to access inventories through all channels alongside availing facilities like buy online, pick up in store, and reserve online, pick up in store. We believe that the company’s well-balanced store expansion and e-commerce strategies will help Zumiez keep track of the evolving patterns and drive top-line growth.

Valuation Perspective

A glimpse of some valuation metrics seems to indicate that Zumiez has enough room to run in bourses. Also, a Value Score of A indicates the same.

Zumiez with a price to book ratio of 1.6 compared with that of industry’s 3.8 indicates that the stock has enough upside potential. The stock also looks attractive with respect to a forward price-to-earnings (P/E) multiple of 13.5x versus industry’s 15.2x. A more-or-less similar picture emerges when comparing EV/EBITDA ratios. Zumiez holds the edge here with an EV/EBITDA ratio of 5.3 lower than 6.0 for the industry.

Other Key Picks

Abercrombie & Fitch Co. (ANF - Free Report) has a long-term earnings growth rate of 15.3% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Foot Locker, Inc. (FL - Free Report) has a long-term earnings growth rate of 9.4% and a Zacks Rank #1.

Nordstrom, Inc. (JWN - Free Report) delivered average positive earnings surprise of 11.2% in the trailing four quarters. It has a long-term earnings growth rate of 6% and a Zacks Rank #2.

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